Retail investors pulled £2.4bn in net outflows from equities in September due to uncertainty around the Autumn Budget, according to the latest data from the Investment Association.

This compares to a £424m net outflow for equities in August.

The only equity region to remain in inflow was North America, with net retail sales of £101m.

Net retail sales of equity funds by region

Source: Investment Association retail funds data, September 2024

Overall investment funds saw outflows of £3,4bn over the month, following positive net flows in July and August (£1.4bn and £806m respectively). This took third quarter net retail sales to a £1.2bn outflow, contrasting with the £4.4bn net inflows recorded in Q2.

Bond fund net flows turned negative with outflows of £116m, following an inflow of £1.8bn in August.

Mixed asset funds saw outflows climb to £534m, from £192m in August. This includes record outflows in September from the Mixed Investment 40-85% Shares sector of £354m, as the prospect of CGT rises impacted sectors targeting capital growth as investors anticipated an increased tax take on equity investments held outside ISAs and pension wrappers.

Responsible investment funds saw record outflows of £604m, exceeding the previous record outflow of £541m in October 2023.

Inflows to index tracking funds remained high at £1.7bn, although inflows were the lowest since October 2023 when net retail sales were £363m. Tracker funds under management stood at £360.7bn at the end of September. Their overall share of industry funds under management was 24.1%.

UK investor funds ended September with £1.497 trillion under management, a 0.5% fall from the previous quarter.

Miranda Seath, director of market insight and fund sectors at the Investment Association, said whilst uncertainty around the Budget and Labour’s fiscal strategy drove outflows for September, the longer term impact will likely be less severe.

She said: “In the longer term, and with the Budget now in the rear-view mirror, there does appear to be some clarity for investors, but only if the Chancellor is able to stick to her commitment to setting long-term and stable fiscal policy, and achieve growth, without raising taxes further.

“Looking ahead to the final quarter of 2024, Trump’s US election victory will be a more significant factor in the fortunes of markets around the world and investors will be watching closely.”

Funds under management and net sales September 2024

Source: Investment Association retail funds data, September 2024