Volatility fears take multi-asset fund sales to £1bn

High market volatility in February resulted in more retail investors using multi-asset fund managers and pushing net sales up to £1bn, new figures show.

Data from the Investment Association tracking net retail fund sales in February show investors avoided both bond and equity funds with £235m and £136m outflows, respectively.

In early February the US market sold off amid fears the US Federal Reserve could raise rates earlier than expected due to positive fundamentals in the economy. The move led other markets in Europe and Asia to follow through with stocks falling rapidly.

However, UK equities remained the least popular asset class among investors who pulled £510m out of the region in February.

Overall, net retail sales across the board more than halved in February to £1.2bn from £3.7bn the previous month.

IA fund market specialist Alastair Wainwright says: “Investors in mixed asset funds tend to be agnostic to short-term market events as asset allocation is in the hands of their fund manager. The last net retail monthly outflow was in January 2016 and within that time period we have seen 11 months where net retail sales exceeded £1bn.

“Interestingly, tracker funds, whose returns are more sensitive to market volatility, received positive net retail inflows into all asset classes.”

Tracker funds saw £796m inflows in February, and now funds under management stand at 13.7 per cent, compared to 13.4 per cent in January.

Architas investment director Adrian Lowcock says:“Investors drop in confidence about the direction of equity and bond markets is clearly reflected in the most popular asset classes with £455m being put on the side-lines through money market funds.

“Some investors are clearly choosing to protect the gains made. The rise in popularity of mixed asset funds continues as investors prefer to delegate decision making to professional managers.”

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