- £5.9 billion outflow from funds in October, marking the third worst month on record.
- Equity funds were particularly affected with outflows totalling £4.2 billion in October. UK Equity outflows also rose to £1.3 billion, their highest level since May 2024.
- Outflows across asset classes at the start of Q4 2024 has disrupted a more positive period of sales for the UK funds industry.
05 December 2024– Anticipated Budget tax rises weighed on investors in October, as net retail sales of investment funds saw outflows of £5.9 billion, the third worst month on record, according to data published by the Investment Association (IA) today.
The significant figure follows a £3.4 billion outflow in October, with only March 2020 and September 2022 standing as the highest recorded monthly outflows at £9.7 billion and £7.5 billion respectively.
Key findings for October 2024 –
- All asset classes saw outflows, with equity funds bearing the brunt with £4.2 billion in outflows. All equity regions were in outflow, with the highest withdrawals from globally diversified funds, which saw £1.8 billion in outflows.
- UK Equity outflows rose to £1.3 billion, their highest level since May 2024.
- Bond funds saw outflows of £822 million, up from £114 million in September. There did remain pockets of inflow in fixed income however, notably Corporate Bond (£262 million) and UK Gilts (£156 million).
- Mixed asset funds saw outflows soften slightly month-on-month, from £534 million to £445 million, but outflows remain high by historic standards.
- Others - £46 million in outflows overall, despite £470 million into Volatility Managed, which was the top selling sector.
- Index tracking funds remained in inflow with net retail sales of £880 million, however this was the lowest inflow in a year.
Equity outflows - Bearish on Budget
Net retail sales by equity region, October 2023 to October 2024
Equity funds continued to receive the cold shoulder from investors in October with a significant £4.2 billion in outflows, with UK equity funds seeing their highest level of outflows (£1.3 billion) since May.
Driving this uncertainty and outflow was the impending Budget as investors responded to the prospective tax regime changes by selling out of equity funds to realise any capital gains ahead of an expected tax hike. There have also been reports that pension investors withdrew assets expecting the tax-free lump sum to be removed.
As the year draws to a close, substantial outflows across asset classes in October (£5.9 billion) and September (£3.4 billion) has disrupted a more positive period for sales for the UK funds industry over the summer, just as signs of growing investor confidence were beginning to emerge.
Miranda Seath, Director, Market Insight & Fund Sectors at the Investment Association, said:
“As details became clearer on the scope and depth of the Government’s impending tax reforms, it was inevitable that some investors would make changes to avoid an increase in their tax liability, in what was an already complex investing environment. This has resulted in the highest outflows from the large equity sectors, in anticipation of the capital gains tax rise. However, with every asset class experiencing outflows, this indicates broader uncertainty among investors about the potential impact of the Budget, including speculation over tax changes to pensions.
“Looking ahead, with the Budget now behind us and a long-term fiscal policy in place, investors have greater clarity on the path the Government will take. For UK equities, the near-term outlook remains challenging. Yet, if Labour can successfully deliver the economic growth in the domestic economy it has promised, we may see green shoots of growth and with it the longer-term potential for a return to investor appetite for funds investing in their domestic market, where shares are relatively cheap compared to US company valuations.
“As 2024 comes to a close, investors will be looking ahead into the new year, with all eyes turning towards the US and the new Trump presidency. The US market has been the major driver of equity returns in 2024 and in the near term, this looks set to continue but investors will be watching closely in 2025.”
ENDS
APPENDIX
FUNDS UNDER MANAGEMENT AND NET SALES – October 2024
| Funds Under Management | Net Retail Sales | Net Institutional Sales |
October 2024 | £1.49 billion | -£5.91 billion | -£1.96 billion |
October 2023 | £1.33 billion | -£4.69 billion | -£1.88 billion |
BEST SELLING INVESTMENT ASSOCIATION SECTORS
The five best-selling Investment Association sectors for October 2024 were:
- Volatility Managed with net retail sales of £470 million.
- Corporate Bond followed with net retail sales of £262 million.
- UK Gilts with net retail sales of £156 million.
- China/Greater China with net retail sales of £140 million.
- Mixed Investment 40-85% Shares was fifth with net retail sales of £29 million.
The worst-selling Investment Association sector in October 2024 was Global, which experienced outflows of £1.1 billion.
NET RETAIL SALES BY ASSET CLASS
All asset classes experienced outflows.
Other saw £46 million in outflows.
Property saw £64 million in outflows.
Money Market saw £362 million in outflows.
Mixed Asset saw £445 million in outflows.
Fixed Income saw £822 million in outflows.
Equity saw £4.2 billion in outflows.
NET RETAIL SALES OF EQUITY FUNDS BY REGION*
All equity regions experienced outflows.
Asia funds experienced outflows of £216 million.
Japan funds experienced outflows of £226 million.
Europe funds experienced outflows of £339 million.
North America saw net retail outflows of £746 million.
UK funds saw net retail outflows of £1.3 billion.
Global funds saw net retail outflows of £1.8 billion.
TRACKER FUNDS
Tracker funds saw net retail inflows of £880 million in October 2024. Tracker funds under management stood at £358.6 billion at the end of October. Their overall share of industry funds under management was 24.0%.
RESPONSIBLE INVESTMENT FUNDS
Responsible investment funds saw a net retail outflow of £572 million in October 2024. Responsible investment funds under management stood at £103.2 billion at the end of October. Their overall share of industry funds under management was 6.9%.
For further information, please contact:
Helen Ayres, Head of Communications: helen.ayres@theia.org
T: +44 (0)20 7269 4620
Ellen Hodgetts, Communications Manager: ellen.hodgetts@theia.org
T: +44 7548841289
IA Press Office: press@theia.org
About the Investment Association (IA):
- The IA champions UK investment management, supporting British savers, investors and businesses. Our 250 members manage £9.1 trillion of assets and the investment management industry supports 126,400 jobs across the UK.
- Our mission is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for the economy, so everyone prospers.
- Our purpose is to ensure investment managers are in the best possible position to:
- Build people’s resilience to financial adversity
- Help people achieve their financial aspirations
- Enable people to maintain a decent standard of living as they grow older
- Contribute to economic growth through the efficient allocation of capital.
- The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
- The UK is the second largest investment management centre in the world, after the US and manages 37% of all assets managed in Europe.
Notes to Editors
To see a breakdown of the fund data referenced in this press release, please see all of the tables here.
The Investment Association's figures for fund sales cover retail and institutional sales in authorised unit trusts and open-ended investment companies (OEICs) provided by our membership to UK investors. The figures do not include investment trusts and ETFs. Each month small revisions to figures have been made since the previous press release. This reflects additional information received by The Investment Association.
Net retail sales comprise total retail sales minus repurchases (including switches between funds), thus the figures can result in a negative figure or outflow.
* Regional breakdown for equity funds
The following Investment Association sectors have been grouped together to compile the figures for regional equity sales:
Asia | Europe | Global | Japan | North America | UK |
Asia Pacific excl. Japan | Europe excl. UK | Global | Japan | North America | UK All Companies |
Asia Pacific incl. Japan | Europe incl. UK | Global Emerging Markets | Japanese Smaller Companies | North America Smaller Companies | UK Equity Income |
China/Greater China | Europe Smaller Companies | Global Equity Income |
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India/Indian Subcontinent |
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| Technology and Technology innovation |
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| Financials and Financial innovation |
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Direct Channels
Direct includes sales forces and tied agents, private clients and other direct to investor sales without intermediation.
** The Investment Association’s ISA figures are based on information collected from fund companies and five fund platforms (AEGON, Fidelity, Hargreaves Lansdown, Quilter, and Transact) where they are the ISA provider. Fund business through other ISA providers such as wealth managers is not included. The Investment Association’s figures cover about three-quarters of the whole of the market for funds held in ISAs.
