UK households feel the squeeze as £24.3 billion taken from investment funds in 2023
UK savers took £24.3 billion out of funds in 2023, according to the year-end data published today by the Investment Association (IA). This is down from 2022’s outflow of £26.9 billion and is only the second year that an annual outflow has been recorded.
Key findings for 2023:
- Money Markets was the bestselling asset class, closing the year with £2.2 billion invested overall. Fixed Income was second, with an inflow of £716 million.
- UK Gilts saw £2.5 billion invested, while investors put £2 billion into Government Bonds as investors have been enticed by higher yields in 2023.
- Inflows to Tracker funds remained strong at £13.8 billion with only one month of outflow 2023 in a tough year overall for fund sales. Outflows from active funds reached £38.1 billion in 2023.
- Equity funds faced a challenging year, experiencing £22 billion in outflows. This was largely driven by UK equities, which saw £14 billion in outflows in the eighth consecutive year of outflows.
- Responsible Investment funds experienced declining sales throughout the year reaching a £3 billion outflow.
- Volatility Managed was 2023’s best-selling sector with inflows of £2.7 billion across the year.
Miranda Seath, Director, Market Insight & Fund Sectors at the Investment Association, said:
“The cost-of-living crisis and economic uncertainty has continued to impact households across the UK, with investors withdrawing just under £24.3 billion from funds. The impact of higher interest rates was a key factor in retail investor activity and decision-making. Cash savings accounts offered attractive interest rates for the first time in over a decade, impacting net retail sales.
“Investors showed caution, opting for a flight to safe assets in UK gilts and Government bonds, which also saw rising yields in 2023, Money Market funds came out on top as the best-selling asset class, and investors also opted for low-cost tracker funds, which saw strong inflows of £14 billion.
“Meanwhile, equity funds faced a challenging year. UK equities hit a record outflow at £14 billion in the eighth consecutive year of outflows. Responsible investment funds saw flat sales in the first half of the year and experienced a decline in popularity towards the end of 2023.
“As we look ahead, we will see how UK investors respond to market shifts in 2024. When, how fast and how far Central Banks cut interest rates remains crucial. In January, investors took out £1 billion out of funds, however Tracker funds continued to see strong inflows at £1.7 billion. It is also an election year in the US, India and UK, and political change could impact the investment outlook. However, the impact of the market shocks we saw in 2022 have dissipated to a large extent.”
FUNDS UNDER MANAGEMENT AND NET SALES – END OF YEAR 2023
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Funds Under Management |
Net Retail Sales |
Net Institutional Sales |
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2023 |
£1.4 trillion |
-£24.3 billion |
-£33.5 billion |
|
2022 |
£1.4 trillion |
-£26.9 billion |
-£23.4 billion |
BEST SELLING INVESTMENT ASSOCIATION SECTORS
The five best-selling Investment Association sectors for 2023 were:
- Volatility Managed with net retail sales of £2.7 billion.
- UK Gilts with net retail sales of £2.5 billion.
- Government Bond followed with net retail sales of £2.0 billion.
- Short Term Money Market with net retail sales of £1.5 billion.
- Global was fifth with net retail sales of £1.2 billion.
The worst-selling Investment Association sector in 2023 was UK All Companies, which experienced outflows of £10.2 billion.
NET RETAIL SALES BY ASSET CLASS
Money Market saw inflows of £2.2 billion.
Fixed Income saw inflows of £716 million.
Others saw outflows of £45 million.
Property saw £644 million in outflows.
Mixed Asset saw outflows of £4.1 billion.
Equity funds saw outflows of £22.4 billion.
NET RETAIL SALES OF EQUITY FUNDS BY REGION*
Japan funds experienced inflows of £466 million.
Asia funds saw net retail outflows of £73 million.
North America funds saw outflows of £379 million.
Global funds saw net retail outflows of £908 million.
Europe funds saw outflows of £2.8 billion.
UK funds saw outflows of £13.6 billion.
TRACKER FUNDS
Tracker funds saw net retail inflows of £13.8 billion in 2023. Tracker funds under management stood at £324 billion at the end of 2023. Their overall share of industry funds under management was 22.7%.
RESPONSIBLE INVESTMENT FUNDS
Responsible investment funds saw a net retail outflow of £3 billion in 2023. Responsible investment funds under management stood at £102 billion at the end of 2023. Their overall share of industry funds under management was 7.2%.
GROSS RETAIL SALES BY DISTRIBUTION CHANNEL
Gross retail sales for UK fund platforms totalled £149 billion, representing a market share of 48.7%.
Gross retail sales through other UK Intermediaries including IFAs totalled £88 billion, representing a market share of 28.9%.
Gross retail sales for Discretionary Manager totalled £22 billion, representing a market share of 7.1%.
Direct gross retail sales totalled £12 billion, representing a market share of 4%.
In 2023, Execution only intermediaries totalled £1.9 billion in gross retail sales and accounted for 0.6% of the market.
FUNDS UNDER MANAGEMENT AND NET SALES – JANUARY 2024
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Funds Under Management |
Net Retail Sales |
Net Institutional Sales |
|
January 2024 |
£1.42 trillion |
-£1.1 billion |
-£1.7 billion |
|
January 2023 |
£1.41 trillion |
£398 million |
-£4.7 billion |
BEST SELLING INVESTMENT ASSOCIATION SECTORS
The five best-selling Investment Association sectors for January 2024 were:
- Short Term Money Market with net retail sales of £1.1 billion.
- Corporate Bond with net retail sales of £519 million.
- Volatility Managed followed with net retail sales of £215 million.
- Global with net retail sales of £200 million.
- Technology and Technology Innovation was fifth with net retail sales of £135 million.
The worst-selling Investment Association sector in January 2024 was UK All Companies, which experienced outflows of £753 million.
NET RETAIL SALES BY ASSET CLASS
Equity funds saw outflows of £1.5 billion.
Money Market saw inflows of £1.1 billion.
Mixed Asset saw outflows of £215 million.
Fixed Income saw outflows of £424 million.
Property saw £72 million in outflows.
Others saw outflows of £12 million.
NET RETAIL SALES OF EQUITY FUNDS BY REGION*
North America funds saw inflows of £63 million.
Japan funds experienced inflows of £22 million.
Asia funds saw net retail outflows of £43 million.
Europe funds saw outflows of £20 million.
Global funds saw net retail outflows of £69 million.
UK funds saw outflows of £1 billion.
TRACKER FUNDS
Tracker funds saw net retail inflows of £1.7 billion in January 2024. Tracker funds under management stood at £325 billion at the end of November. Their overall share of industry funds under management was 22.9%.
RESPONSIBLE INVESTMENT FUNDS
Responsible investment funds saw a net retail outflow of £394 million in January 2024. Responsible investment funds under management stood at £102 billion at the end of January. Their overall share of industry funds under management was 7.2%.
GROSS RETAIL SALES BY DISTRIBUTION CHANNEL
Gross retail sales for UK fund platforms totalled £12 billion, representing a market share of 48.8%.
Gross retail sales through other UK Intermediaries including IFAs totalled £6.8 billion, representing a market share of 27.3%.
Gross retail sales for Discretionary Manager totalled £1.6 billion, representing a market share of 6.3%.
Direct gross retail sales totalled £1.1 billion, representing a market share of 4.6%.
In January, Execution only intermediaries totalled £119 million in gross retail sales and accounted for 0.5% of the market.
ENDS
For further information, please contact:
Helen Ayres, Head of Communications: [email protected].
T: +44 7596 872575
Arianna Schardt, Communications Executive: [email protected]
T: +44 (0) 20 7269 4625
Ismail Abdi, Communications Trainee, [email protected]
+44 7596 872575
IA press office: [email protected]
Notes to Editors
The Investment Association has made a data revision to its monthly fund statistics, which has resulted in revising down annual net retail sales over 2023. The change to flow data is principally from funds that are not allocated to the IA sectors. These sales appear in the Unallocated row on tab 7 of the 2023 press tables. This in turn has impacted on the reported total retail sales at industry and asset class level. There has been a small downward revision of FUM. Firms making revisions to the data reported have now submitted updated data to the IA with the revised year-end figures published in this month’s press release.
To see a breakdown of the fund data referenced in this press release, please see 2023 tables here and January 2024 tables here.
The Investment Association's figures for fund sales cover retail and institutional sales in authorised unit trusts and open-ended investment companies (OEICs) provided by our membership to UK investors. The figures do not include investment trusts and ETFs.
Each month small revisions to figures have been made since the previous press release. This reflects additional information received by The Investment Association.
Net retail sales comprise total retail sales minus repurchases (including switches between funds), thus the figures can result in a negative figure or outflow.
* Regional breakdown for equity funds
The following Investment Association sectors have been grouped together to compile the figures for regional equity sales:
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Asia |
Europe |
Global |
Japan |
North America |
UK |
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Asia Pacific excl. Japan |
Europe excl. UK |
Global |
Japan |
North America |
UK All Companies |
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Asia Pacific incl. Japan |
Europe incl. UK |
Global Emerging Markets |
Japanese Smaller Companies |
North America Smaller Companies |
UK Equity Income |
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China/Greater China |
Europe Smaller Companies |
Global Equity Income |
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UK Smaller Companies |
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India/Indian Subcontinent |
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Specialist |
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Healthcare |
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Technology and Technology innovation |
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Financials and Financial innovation |
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Direct Channels
Direct includes sales forces and tied agents, private clients and other direct to investor sales without intermediation.
** The Investment Association’s ISA figures are based on information collected from fund companies and five fund platforms (AEGON, Fidelity, Hargreaves Lansdown, Quilter, and Transact) where they are the ISA provider. Fund business through other ISA providers such as wealth managers is not included. The Investment Association’s figures cover about three-quarters of the whole of the market for funds held in ISAs.
About the Investment Association (IA):
The IA champions UK investment management, supporting British savers, investors and businesses. Our 250 members manage £8.8 trillion of assets and the investment management industry supports 126,400 jobs across the UK.
Our mission is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for the economy, so everyone prospers.
Our purpose is to ensure investment managers are in the best possible position to:
- Build people’s resilience to financial adversity
- Help people achieve their financial aspirations
- Enable people to maintain a decent standard of living as they grow older
- Contribute to economic growth through the efficient allocation of capital.
The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
The UK is the second largest investment management centre in the world, after the US and manages 37% of all assets managed in Europe.
