Sales to Indian and North American equities provide bright spot in month of outflows

FOR IMMEDIATE RELEASE 

UK investors took £2.7 billion from funds in February, according to data published today by the Investment Association (IA). This outflow is an increase of £1.6 billion from January. 

Key findings for February 2024:  

• All major asset classes saw outflows in February. Outflows were highest from Money Market funds, with investors taking out £1.2 billion principally from the Short Term Money Market Sector.  

• Outflows from Equity funds slowed to £259 billion as investors opted for funds investing in North America and India. 

• North America was the best-selling IA sector, with a £770 million inflow. 

• The India/Indian Subcontinent Sector saw record inflows of £228 million, equivalent to a sizeable 4.7% of funds under management.  

• Tracker funds maintained steady inflows of £2.1 billion.  

• Outflows from Responsible Investments slowed to just £7 million in February.  

Miranda Seath, Director, Market Insight & Fund Sectors at the Investment Association, said: 

"February marks a second consecutive month of outflows across all asset classes. Flows to funds tracking indices continue to buck this trend, remaining resilient. Investors continue to use tracker funds to gain cost effective exposure to the major developed markets– the US stock market has returned 6% since the beginning of 2024 and that has translated into solid sales to trackers, which made up two thirds of inflows to the top selling North America sector. 

“Investors are also looking to opportunities in India and the Indian Subcontinent. This is a relatively small sector by FUM, but in February a record inflow suggests that India is emerging as an attractive alternative to China. China’s economic growth has struggled after a tough pandemic and investors have pivoted.”  

"Outflows from money market funds are at levels last seen in June 2022. As investors see inflation stabilising, and with it the promise of interest rate cuts, they are starting to re-allocate away from cash-like funds. Some of that capital may flow back into equities as we are beginning to see in the North America and Indian sectors." 

FUNDS UNDER MANAGEMENT AND NET SALES – February 2024  

BEST SELLING INVESTMENT ASSOCIATION SECTORS   

The five best-selling Investment Association sectors for February 2024 were:   

1. North America with net retail sales of £770 million.    

2. Global with net retail sales of £475 million.    

3. Volatility Managed followed with net retail sales of £317 million.    

4. Corporate Bond with net retail sales of £279 million.    

5. India/Indian Subcontinent was fifth with net retail sales of £228 million. 

The worst-selling Investment Association sector in February 2024 was Short Term Money Market, which experienced outflows of £705 million.   

NET RETAIL SALES BY ASSET CLASS 

Others saw inflows of £56 million. 

Property saw £41 million in outflows.  

Fixed Income saw £231 million in outflows.   

Equity funds saw £259 million in outflows.  

Mixed Asset saw £975 million in outflows.  

Money Market saw £1.2 billion in outflows. 

NET RETAIL SALES OF EQUITY FUNDS BY REGION*   

North America experienced inflows of £821 million.  

Asia funds experienced inflows of £115 million. 

Europe funds experienced inflows of £56 million. 

Japan funds experienced inflows of £46 million. 

Global funds saw net retail outflows of £370 million.  

UK funds saw net retail outflows of £1 billion. 

TRACKER FUNDS 

Tracker funds saw net retail inflows of £2,1 billion in February 2024. Tracker funds under management stood at £334 billion at the end of February. Their overall share of industry funds under management was 23.3%.  

RESPONSIBLE INVESTMENT FUNDS  

Responsible investment funds saw a net retail outflow of £7 million in February 2024. Responsible investment funds under management stood at £104 billion at the end of February. 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 £13.8 billion, representing a market share of 50.3%.  

Gross retail sales through other UK Intermediaries, including IFAs, totalled £6.6 billion, representing a market share of 24.2%.  

Gross retail sales for Discretionary Manager totalled £2.1 billion, representing a market share of 7.6%.  

Direct gross retail sales totalled £1.2 billion, representing a market share of 4.3%.  

In February, Execution only intermediaries totalled £269 million in gross retail sales and accounted for 1% of the market.  

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