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Investment funds see largest retail outflows since financial crisis

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Funds saw the largest outflows since the financial crisis as retail investors pulled £463m from investment vehicles in January, the latest data from the Investment Association shows.

Fixed income funds took the brunt of the outflows, with investors pulling £267m from the funds, while multi-asset funds saw £157m of outflows in the month. Equity outflows were more muted at £58m, while property funds saw £27m of outflows.

The monthly outflows are the worst since October 2008, when £493m was withdrawn from the market.

However, tracker funds continued to see inflows, with £543m pouring into the funds in the month.

Investment Association interim chief executive Guy Sears says the volatility seen in January caused the outflows.

He says: “Although there was a small monthly net outflow, equity funds remained popular with positive net sales in North American and Japanese focused funds, while Europe excluding UK funds fared particularly well amid the choppy month.

“Fixed income and mixed asset funds were most affected by outflows, but it is important to note that this was the first net outflow for mixed asset funds in over a year.

“We also saw investor appetite for passive strategies remain strong in January, with net retail sales over £500m.”

Hargreaves Lansdown senior analyst Laith Khalaf says the figures are particularly noticeable as “steady eddy asset classes”, such as fixed income, saw the largest outflows.

He adds: “This January it seems to have been a nasty coincidence that all main asset classes saw outflows at the same time, which resulted in such a negative overall figure. Even the property sector which has been so buoyant of late saw a small outflow.

“Passive funds continue to attract money despite some of the biggest companies in the UK stock market falling foul of the commodity rout, which suggests index trackers are enjoying a secular growth story at the moment.”

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