Private investors withdrew £963 million from UK equity funds in March, according to Investment Association statistics released this morning.
Overall, net fund sales to retail investors were down by more than half compared to March 2014, at £1.1 billion. Indeed, fund sales in 2015 have been weak all year so far.
Institutions were also net sellers of funds, to the tune of £1.5bn.
Daniel Godfrey, The Investment Association chief executive, said: “Net retail sales this March were well down in comparison to a year ago following the pattern seen in January and February. However, we did see record net retail sales of £938 million into tracker funds. It was also a particularly notable month as we saw retail investors switching record amounts out of UK equity funds and into European equity funds, developing a trend seen over the previous couple of months.
“The usual late push into ISAs at the end of tax year was smaller this year, with £585 million invested through funds from 1 March to 5 April 2015 compared to £822 million in the same period last year. But there was growth in overall annual sales helped by the increase of the tax free ISA allowance.”
General Election jitters could be one reason for the outflows from UK equity funds. Laith Laith Khalaf, senior analyst at Hargreaves Lansdown, commented: “Private investors are staging a buyer’s strike in the lead up to the election. This is pretty par for the course when it comes to the uncertainty generated by such a big political event, and the Footsie reaching a record high won’t have helped matters.
“However investors need to take a deep breath and try to tune out the election clamour when it comes to making decisions about their portfolio. The election can certainly dent market confidence in the short term, but it won’t have a significant impact on the long term profits of UK companies, many of which derive their earnings from overseas.”