Investors pulled £870m from equity funds in January, while absolute return funds have lost £3.4bn since summer 2018, AJ Bell has revealed.

According to AJ Bell personal finance analyst Laura Suter, the “epic” outflows seen in December were stemmed slightly in January, though investors still withdrew a net £859 from funds overall. As a result of this, Suter believes that fund managers will be “praying” for ISA season bounce to boost sales in the coming months.

However, the personal finance analyst highlighted that managers may “prove disappointed” due to Brexit uncertainty and general “nervousness” in markets.

“The direction of stock markets was undoubtedly the main concern for investors, with £870m pulled from equity funds, while fixed income and multi-asset funds saw inflows overall. Outflows from European equity funds ramped up to their highest level since the ‘Leave’ vote in 2016, with £412m withdrawn from the funds. Meanwhile UK funds saw £135m of outflows, however, this is a significant improvement on previous months,” Suter reported.

Suter described Bank of England governor Mark Carney as the “unreliable boyfriend” when it comes to interest rates, stating that investors are “clearly concerned” by the next step he will take once the resolution of Brexit is “clearer”.

“Targeted Absolute Return funds marked their seventh straight month of outflows, with £3.4bn pulled from the funds in that time. A clear example of this is in the figurehead of the sector, Standard Life GARS, which has seen its funds under management slump to £10.5bn.

“As for the bright spots, North America rebounded after a flood of outflows last month, with these funds taking in £142m in January – but this only goes some way to making up for the £250m pulled from the funds in December. Japan and global funds were the only other areas to see significant inflows.”

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