Investment funds sold in the UK suffered their highest withdrawals since 2015 as markets have been pummelled by the coronavirus outbreak and fears of a global recession.
Net redemptions from a sample of funds tracked by transaction network Calastone reached £2.3bn during the 14 trading days to the end of March 12.
While the figures are a snapshot of investment fund flows, they reflect broader investor jitters in the wake of the wild ructions that markets have undergone in the past three weeks.
“We are seeing net outflows across all fund types as investors flee to the safety of cash,” said Edward Glyn, head of global markets at Calastone.
Actively managed equity funds tracked by Calastone were the hardest hit, bleeding a net £1.9bn over the period, with European and global equity strategies suffering the most.
During the last week of February, when news of Italy’s coronavirus outbreak began to batter markets, active equity funds on Calastone’s platform endured their fastest rate of redemptions in five years.
The flow picture for equity funds improved in the past two weeks as investors sought to “buy the dip” but did not offset the heavy redemptions. On Thursday last week, when US markets fell by a tenth, active equity funds suffered £150m of withdrawals, while on Monday outflows totalled £266m.
Bond funds — seen as relatively less risky investments — did not escape the pain, losing £1bn over the period — a reversal from the bumper flows they attracted for most of last year.
“Fear is rife in the fixed-income market,” said Mr Glyn, adding that investors were concerned about the pandemic triggering sovereign debt crises or companies defaulting on their debts.
The outflows come as investors inspect their losses on many popular investment strategies.
London-based bond house H2O Asset Management’s flagship Multibonds fund lost 20 per cent of its value one day last week, while its Alpha 10 fund fell 15.8 per cent.
Strategies exposed to energy companies have also suffered, with Schroders’ £136m ISF Global Energy fund falling by about a third at the start of the week.
Calastone estimates that more than two-thirds of UK fund flows by value pass across its network each month, providing a timely insight into shifts in investor sentiment.
