Investors pull £400m from funds in volatile February

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Fund managers continued to feel the pain in February as cautious investors withdrew cash from retail funds.

Net retail outflows hit £399m in February, the latest Investment Association data shows. In January UK funds suffered net outflows of £437m – the largest figure since the 2008 financial crisis.

Targeted absolute return was the top-selling Investment Association sector in February with net retail sales of £243m – its best performance since October 2015.

Tracker funds saw net retail inflows of £91m, down significantly from January when inflows were of £537m.

Property funds experienced net outflows of £119m during the month, the largest outflow since November 2008, while equity funds and fixed income funds hemorrhaged £196m and £265m, respectively.

Investment Association interim chief executive Guy Sears says: “Caution was still evident amongst retail investors in February as they reduced their holdings in investment funds amid volatile markets.

“Outflows were seen across a range of asset classes, but we did see investor appetite for absolute return and equity income products.”

Japanese equity funds were the best-selling in February with net retail sales of £78m, while North American and Asian equity products experienced the largest outflows of £107m and £159m, respectively.

Axa Wealth head of investing Adrian Lowcock says: “The big sell-offs in January and subsequent market uncertainty has led investors to take a more cautious approach with their investment decisions in February. The popularity of targeted absolute return funds in February does highlight that many investors had taken on more risk than they possibly liked.”

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Source: Investment Association