Outflows from equity funds reached £6.3bn in 2022, the lowest figure since 2014, with three-quarters of the total coming during Q3.
UK-focused funds were the hardest-hit sector, data from Calastone revealed, with record outflows of £8.5bn
Europe-focused funds recorded a fourth consecutive year of net selling, with £2.3bn in outflows, while Asia-Pacific funds saw £1bn in outflows.
North American funds experienced their first year of outflows since 2016, with a record £1.2bn in outflows.
Passive funds also suffered their first ever year of outflows and performed worse than active funds for a second year running, seeing £4.5bn in outflows compared with active’s £1.8bn.
Global funds bucked the trend, with £4.9bn in inflows, driven almost entirely by ESG strategies, and global ESG equity funds bringing £6.4bn in inflows. Emerging market funds also did better, seeing inflows of £547m.
Equity income funds lost £427m over the year but had their best year since Calastone’s records began, with a tenfold decrease in outflows compared with 2020 and 2021.
Calastone head of global markets Edward Glyn said ‘Fund management groups were hit with a double whammy. The supply of capital shrank as bond and equity markets fell, and the replenishment rate either reduced or went into reverse, as investors either slowed their buying or fled for the safety of cash. The resulting reduction in assets under management brought a significant hit to revenue. But, with more of the pain focused on outflows from index funds, where fees are lower, there are traces of a silver lining for active fund houses.’
Property funds, meanwhile, saw their lowest outflows since 2018, with just £535m withdrawn throughout 2022, compared with £2.1bn the year before. June and July, saw inflows for the sector, before outflows peaked in October, following the Mini Budget. This was driven mainly by a 58% fall in sell orders compared with the previous year. However, buy orders rose 12%.
Link: https://www.investmentweek.co.uk/news/4062240/equity-fund-flows-fall-weakest