The UK’s Investment Association (IA) data, sourced via Lipper, shows that the uncertainty generated around the outcome of Britain’s impending EU membership referendum has had its impact on fund flows in the UK.
Thomson Reuters Lipper reports that mutual funds show an overall drop of 18 per cent in total assets of the funds in all IA classifications and estimated net outflows of GBP38 billion for the 12 months to May 31, 2016. January 2016 proved the worst month overall, with nearly GBP16 billion of net outflows that month alone.
The largest IA sector (UK All Companies), with some 12 per cent of all IA assets, has suffered a yearly net outflow of GBP9.2 billion. In the last 12 months it has experienced only a single positive month of flows (July 2015).
The IA Sterling Strategic Bond sector has been worst hit as a proportion of its overall size in the UK market. With 4 per cent of total assets overall, it has suffered nearly GBP12 billion of net outflows to the end of May 2016, without a single monthly net inflow for the year.
Of the diversified categories the conservative IA Mixed-Asset 0 per cent-35 per cent has proven most resilient, with GBP410 million of net outflows for the year to the end of May 2016. By contrast, the IA Mixed-Asset 20 per cent-60 per cent sector has suffered nearly GBP5 billion of net outflows for the last 12 months.
Only four of the IA sectors have experienced more than GBP1 billion of net inflows in the 12 months to the end of May: Property, Global Equity Income, Global Bonds, and Targeted Absolute Return. The latter sector has been the standout success story for the UK market for the last 12 months. It has collected nearly GBP10 billion of net inflows. This is despite the corresponding average fund return of the sector being a negative 0.6 per cent over the same period.