Investor jitters cause record August stock outflows

Equity funds saw record monthly outflows in August, according to fund flow data from the Investment Association. Nearly £3bn of investment exited the sector during the month, including £1bn pulled from UK equity strategies alone.

The worst performing AI sector was UK All Companies, which accounted for more than three-quarters of the total UK equity investment decline.

Overall, net outflows totaled £2.6bn, the IA said. Following the net withdrawal of £2.5bn from funds in June and £129m in July, the August figure reflects lingering concerns over a potential slowdown in global economic growth.

Responsible investing and trackers were also affected, both recording relatively modest inflows. The latter saw £412m of added investment, their second weakest monthly showing of the year.

As investors moved away from equities in droves, fixed income securities benefited from a second consecutive month of inflows. Just over £1bn more was funneled into the asset class in August, following July’s figure of £893m. Of the top five selling AI sectors in August, three were fixed income; strategic bonds were the most attractive, with composite and corporate bonds ranking third and fifth respectively.

Investment Association chief executive Chris Cummings said: “While August has traditionally been a quieter month for fund sales, political and economic uncertainty continued to leave savers navigating a difficult market dynamics. Bond funds saw inflows, but across most AI sectors, sales weakened or turned into outflows.

“UK households are heading into a tough autumn and winter and are grappling with a cost of living crisis, which may impact their ability to put money aside. With market dynamics shifting, we could see investors react to soaring gilt and UK corporate bond yields, or bide their time until we see a period of relative calm.

So far in 2022, investors have withdrawn £14.6 billion from UK funds.