Coronavirus sees Asia-focused funds suffer worst month in over two years
UK investors pulled a net £61m out of Asia funds in January – the largest figure since July 2016 – as investor confidence slumped amid the spread of coronavirus, according to analysis from global fund network Calastone. Gross redemptions of Asia focused funds were £462m in the month.
Equity funds in general suffered in January, with inflows dropping sharply following renewed interest in December.
In total, £475m flowed into equity funds in the first half of January, but this slowed to £141m in the second half.
Overall, net inflows fell by more than two thirds to £618m last month. Calastone said two-fifths of this new capital flowed into UK equity funds.
Active funds saw inflows of £206m in the first half of the month turn into outflows of £128m in the second half as news of coronavirus hit, but index (passive) funds remained relatively unaffected.
The popularity of ‘safe haven’ fixed income funds rose, with inflows 50% higher than their 12-month average, while outflows from property funds slowed to £78.1m, their lowest level since May 2019.
Edward Glyn, head of global markets at Calastone, said: “The investor verdict on active equity funds was swift and decisive but passive funds were untouched. In times when confidence is weak, active funds bear the brunt of selling, while passive funds are relatively unscathed. By the same token, a sudden upturn in confidence, like we saw in December, is far more positive for active funds.
“Passive funds are cemented into regular savings plans via ISAs and pensions so investors clearly do not tinker with their passive holdings that much. By contrast, they trade their active funds much more dynamically, responding quickly to market events as they happen.”