UK investor sentiment bounces back in March with first positive fund inflows
UK investors put their money into funds for the first time in the last year during March, funnelling £446m into the market.
After a difficult stretch, March marked the first month of positive fund inflows in a year, with investors funnelling £446m into the market.
Despite British investors feeling confident in the market again, UK-focused funds still saw poor performance, with a net £1.3bn being withdrawn from them according to Investment Association data.
However, global and US-focused funds were the best equity performers, gaining £753m and £654m in March. Since the start of the year, investors have poured £1.5bn into American equities.
Fixed income sat on top of all fund categories, with investors pumping £809m into bond funds during the month. Overall, UK investors put £149m into equity funds in March.
March’s recovery followed a difficult February for funds, with £2.7bn being withdrawn throughout the month. In total, there are now £1.47 trillion in investment funds.
Tracker funds still dominate inflows, gaining £2.9bn in March and pushing their share of the market up to 23.5 per cent, with assets totalling £345bn.
Responsible investing continued to face challenges, with its funds losing £329bn during the month, as sustainable equity and mixed asset funds reached their third consecutive quarter of outflows.
Investors also pulled money from Europe and Asia funds, taking out £158m and £71m respectively, although Japan funds specifically gained £145m throughout the month.
In addition, money market and property funds saw outflows from UK investors of £16m and £67m respectively.
While retail investors were net positive in the month due to strong investor sentiment, net institutional sales were still negative, at £1.3bn.
Miranda Seath, director of market insight and fund sectors at the Investment Association, said: “Markets have not yet wobbled at escalating geo-political tensions and there are growing signs of investor confidence boosted by sales bump as investors look to top up their ISA allowances before the end of the tax year.
“As equity performance improves, particularly in the US we have seen Funds under management rise: FUM is up 3 per cent in Q1 and 11 per cent from the recent low at the end of October.
“North America equity funds performed particularly strongly in the first quarter of the year with high inflows of £1.5bn born out of stronger growth rates in the US, the dominance of The Magnificent Seven stocks, as well as the Federal Reserve’s monetary policy decisions helping to tame inflation, which has fallen faster in the US than in the UK and Europe.”
