Fund flows show sign of rebound after March exodus
Fund flows showed signs of recovery in April after outflows surged for a third consecutive month in March in the face of tightening monetary policy and war in Ukraine.
Total outflows from retail funds jumped from £2.5bn in February to £3.4bn in March, according to data published today by the Investment Association, as investor jitters crystallised amid volatile equity markets.
IA boss Chris Cummings said caution was the watchword for investors through March as nervousness spread.
“Although Russia launched its invasion of Ukraine in February, the economic ramifications of the conflict became clearer in March,” he said.
“Outflows from European Equity funds accelerated sharply to £505 million, as investors considered the risks of Europe’s dependence on Russian commodities.”
Cummings said that responsible investment funds had remained a small bright spot for investors as they notched up their strongest monthly inflows so far in 2022.
But analysts say the wider picture has brightened for investors in April as market concerns have settled.
“It is worth noting that April flows data has been more positive – at least amongst HL clients,” said Emma Wall, head of investment analysis at Hargreaves Lansdown.
“We have seen inflows over the past month, particularly into broad-based active and passive equity funds, such as Rathbones Global Opportunities and FTSE All World ETFs.”
It comes as fresh data underlined a sentiment shift among investors in the wake of the invasion, with European investors flocking to local market equities and backing oil firms and gold.
Around 37 per cent of investors said they are now more likely to back gold investment in light of the war, while 35 per cent said they would put cash into their own regions stocks, according to a survey by investment bank UBS.