Funds were hit by a record £25.7bn in outflows in 2022 as frightened investors withdrew their money, according to a leading investment trade body.

The fund manager trade body the Investment Association said 2022 was the first year an annual outflow had been recorded.

December continued the bad news with UK investors pulling £282m from funds, the tenth month of net retail outflows of 2022.

The last time fund sales were hit as much was in 2008 during the Global Financial Crisis.

The IA said that there were few bright spots in 2022 but responsible funds bucked the trend with £5.4bn of inflows and tracker funds saw annual inflows of £11bn.

Key fund data for December 2022:

• Equity funds saw outflows soften to £33m, despite outflows from UK equity funds of £1.1bn
• Fixed Income Funds saw inflows of £389m, down from the previous month’s £1.4bn inflow
• Tracker funds saw £696m of inflows, down from November’s £1.6 billion
• North America was the bestselling IA sector for the second month in a row, seeing inflows of £358m
• UK All Companies saw the highest outflow in December at £1bn  
• Responsible investment funds saw modest inflows of £9m, following the previous month’s £148m outflow

IA chief executive Chris Cummings said: “UK retail investors faced a challenging year in 2022 as inflation soared following the Russian invasion of Ukraine, which caused energy and supply shocks.

“Investors grappled with a cost-of-living crisis and returns from stocks and bonds falling in tandem. Funds saw outflows in 10 months out of 12 last year, with £25.7bn withdrawn through the year, a record annual outflow. As the December data shows, the significant outflows we saw earlier in the year are easing.

“With markets rebounding at the start of 2023 and the outlook for bond investing improving, there are glimmers of hope that investor confidence will increase in the first quarter of 2023.”

FUNDS UNDER MANAGEMENT AND NET SALES 

Source: Investment Association. Also sector figures below.

BEST SELLING INVESTMENT ASSOCIATION SECTORS DEC 2022 

The five best-selling Investment Association sectors for December 2022 were: 

1. North America with net retail sales of £358 million. 
2. Global was second with net retail sales of £237 million. 
3. UK Gilts followed with net retail sales of £127 million. 
4. Targeted Absolute Return was fourth this month with net retail sales of £107 million. 
5. Global Equity Income remained in fifth with net retail sales of £98 million. 

• The worst-selling Investment Association sector in December 2022 was UK All Companies, which experienced outflows of £1.0 billion.  

NET RETAIL SALES BY ASSET CLASS DEC 2022

Fixed Income funds saw inflows of £389 million. 

Other funds (which includes the Targeted Absolute Return, Volatility Managed, and Unclassified sectors) saw £293 million in inflows.

All other asset classes experienced outflows this month.

Equity funds saw outflows of £33 million.

Property funds experienced £93 million in outflows.

Mixed Asset funds saw outflows of £116 million.

Money Market saw outflows of £721 million.

NET RETAIL SALES OF EQUITY FUNDS BY REGION DEC 2022

North America funds saw net retail inflows of £366 billion.

Global funds saw inflows of £224 million.

Asia funds saw inflows of £42 million.

All other equity regions experienced outflows this month.

Japan saw outflows of £104 million.

Europe funds saw outflows of £243 million.

UK funds saw outflows of £1.1 billion.

TRACKER FUNDS DEC 2022

Tracker funds saw net retail inflows of £696 million in December 2022. Tracker funds under management stood at £284 billion at the end of December. Their overall share of industry funds under management was 20.7%.

RESPONSIBLE INVESTMENT FUNDS DEC 2022 

Responsible investment funds saw a net retail inflow of £9 million in December 2022. Responsible investment funds under management stood at £91 billion at the end of December. Their overall share of industry funds under management was 6.7%.

GROSS RETAIL SALES BY DISTRIBUTION CHANNEL DEC 2022 

Gross retail sales for UK fund platforms totalled £9.0 billion, representing a market share of 48.3%.

Gross retail sales through other UK Intermediaries including IFAs totalled £ 5.7 billion, representing a market share of 30.9%.

Gross retail sales for Discretionary Manager totalled £1.5 billion, representing a market share of 7.8%.

Direct gross retail sales totalled £674 million, representing a market share of 3.6%.

In December, Execution only intermediaries totalled £108 million in gross retail sales and accounted for 0.6% of the market.