Investors pull £1.5bn from equity funds in a week over coronavirus fears
Equity funds saw solid inflows in the first three weeks of February of £1.2bn but from the 24th of the month, investors sold a record £1.55bn of holdings. This meant a £348m net outflow figure for February.
According to global fund network Calastone, February 2020 was the worst month since October 2016 for outflows across all fund types in all asset classes.
Figures show 98% of outflows in the final five days of the month came from actively-managed equity funds (£1.18bn of capital). In comparison, index funds only felt a minor impact (£25m).
Global funds were hit the hardest, suffering record outflows, with Asia and Europe bearing the brunt of the sell off.
Calastone figures reveal a net £309m left global funds last month, with £881m flowing out in the last five days alone.
UK funds escaped relatively unscathed as they saw inflows of £227m, only suffering significant selling (£107m) on the last day of the month as the FTSE 100 reached its lowest level in almost five years.
Overall, UK investors pulled a net £144m out of their fund holdings, opting to sit out the volatility in cash.
Edward Glyn, Calastone’s head of global markets, said: “Fear ate greed for lunch in the last few days of February, as equity funds saw outflows at their most ferocious in five years. After an initial flurry of outflows in January, funds benefited from extreme complacency over the coronavirus outbreak. But the news that the epidemic had taken hold in Italy and then quickly spread across the world caused a dramatic re-assessment of its potential impact on the global economy. Investors have voted with their feet.
“The curiously relaxed approach to funds focused on UK equities reflected the limited number of infections, as well as the extremely low valuations for UK shares. That was enough to keep the sellers at bay for a time, but by the last day of the month there were signs of capitulation even for this sector too.”