Investors fled the markets in October, with net outflows of £1.6bn throughout the month, compared to inflows of £5.3bn last October, the latest Investment Association figures revealed.
AJ Bell personal finance analyst Laura Suter reported that bond markets were “hardest hit” and credited the loss to falling property prices and the impact of Brexit on the sector, which led to investors selling £39m in property funds. This is the highest outflow figure in the property fund market since August last year.
Funds classified as other, which include the targeted absolute return and volatility managed assets, also experienced outflows of £735m in October.
The findings from the Investment Association found that mixed asset was the best-selling asset class with £443m in net retail sales, followed by money market, which recorded net retail sales of £215m.
Furthermore, investors pulled another £214m from UK equity funds in October, which continued a year of heavy outflows for the funds, now topping £10.8bn, Suter said.
“But this may have been a savvy move as only two funds in the UK Equity Income sector have delivered a positive return this year – Schroder Income and Schroder Income Maximiser – all others have handed investors losses,” She added.
Suter also commented on the UK All Companies sector, the “largest sector by far”, and highlighted that just seven funds have delivered a positive return to investors, with the remaining 200 all delivering a loss. The FTSE 100 is down 10 per cent in the year so far, while the FTSE 250 is down 12 per cent.
Commenting on the statistics, Investment Association chief executive Chris Cummings said: “Savers are stepping back from bonds with notable outflows from Fixed Income funds in October. With the era of quantitative easing anticipated to end in both the US and Europe, Fixed Income funds have seen their appeal dented.
“This declining appetite for bonds has contributed to UK funds experiencing their largest net retail outflow since the EU referendum, although it remains to be seen whether this is the start of a broader trend within Fixed Income.”
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