The UK fund industry has recorded its largest ever monthly net outflows as March 2020 saw £8.7bn leave UK-domiciled funds, a figure £1.7bn higher than the worst month during the Global Financial Crisis, according to the latest fund flow data from Morningstar.
Fixed income funds took the greatest hit, also recording their highest ever net outflows in a single month as £5.5bn flooded from bond funds as interest rate cuts and increased central bank spending failed to soothe investors.
BlackRock’s passive offering across GBP corporate-bond, GBP government-bong and GBP inflation-linked bond categories accounted for nearly 20% of total fixed income outflows, with the largest net redemptions coming from iShares UK Gilts All Stocks index, which suffered outflows of £704m.
However, Allianz Strategic Bond bucked the trend, seeing net inflows of £330m while outperforming its benchmark by almost 10% and its peers by nearly 16%.
Equity funds saw under £1bn of net outflows with the breakdown of flows reflecting the broader theme of the shift from active to passive, as the former lost nearly £4bn to the latter’s gain of £3.1bn net inflows, with UK large-cap taking the majority of the gain (£2.1bn).
Alternative funds continued their negative trend, losing a further £1.7bn in net outflows, while allocation funds saw a slimmer outflow of £665m and property funds avoided the selloff, mostly due to the vast number of suspended funds.
The five alternative funds worst hit by outflows lost a combined £3bn over the past quarter, with Invesco Global Targeted Returns at the top the list, followed by BNY Mellon Real Return, Jupiter Absolute Return, Aviva Investors Multi-Strategy Target Return and ASI’s GARS rounded off the top five.
Money market funds were one of the few beneficiaries as investors flocked to the safe haven, recording the only positive flows of any category as £662m flowed into the space.
Record outflows in March alone represent 34% of the overall net outflows for the past 12 months.
Reflecting the shift from active to passive strategies, Vanguard achieved a new all-time high for monthly net inflows as £1.2bn flooded the ETF provider’s funds, of which over half (£704m) found its way to the Vanguard FTSE UK All Share index.
With a much larger fixed income offering, BlackRock struggled to demonstrate such record flows, but did manage to remain in the black thanks to their equity ETFs and money market funds, allowing the firm to post a net inflow of £80m despite over £1bn in fixed income outflows.
Fund houses with a predominately active offering saw the worst flows as the top ten groups by highest net outflows lost £6.4bn over the previous month.
Invesco tops the list, suffering outflows of £873m, with M&G (£834m), Jupiter (£757m), Baillie Gifford (£741m) and Schroders (£737m) completing the top five, while Aviva, Janus Henderson, Fundsmith, BNY Mellon and Artemis fill out the top 10 with a combined £2.5bn outflows.
Fidelity proved to be an exception to the rule, seeing small net outflows from its active strategies and small net inflows to its passive ones, added to which was a boost of £185m for its money market fund allowing the firm to mark up net inflows of £25m for the month.
Legal & General bucked the trend entirely as it saw net outflows of £656m from its passive range while its active funds managed to attract net inflows, although, like other groups, its money market fund still posted the most positive inflows with £326m.
This article was previously published on Professionaladviser.com