Equity funds see record outflows as crisis grows

Equity funds experienced their highest ever outflows of retail money in November as investors pulled out their cash in droves amid the ongoing eurozone crisis.

In total investors pulled £864m out of equity funds in the month, compared to a monthly average inflow of £506m for the previous 12 months, according to the Investment Management Association (IMA).

Losses were concentrated across the equity sectors, particularly within developed market sectors.

Specialist, North America, Europe excluding UK, UK Smaller Companies and UK All Companies accounted for a combined net outflow of £728m.

UK Smaller Companies funds saw their greatest monthly outflow since July 2006.

Richard Saunders, chief executive at the IMA, said the outflows were "significant".

"The second half of 2011 has seen a marked slowdown in fund sales from the exceptionally strong levels of the last three years, and there was no let-up in November, which saw the lowest monthly net sales since October 2008," he added.

The highest selling asset class was bonds, with net retail sales of £443m, above the monthly average of £332m for the previous 12 months.

Appetite for the Cautious Managed sector thrived and the sector was the highest selling for the month, with net retail sales of £176m in November, but down on the monthly average of £288m for the previous 12 months.

UK Absolute Return funds were the second most popular offering with £164m in net retail sales in November, the highest level since June 2011 and well above the monthly average of £81m for the previous 12 months.

Meanwhile net retail sales totalled £267m in November, down from £1.8bn year-on-year. November's figure was also significantly down from the previous 12 months' monthly average of £1.7bn. Year to date net retail sales totalled £16.7bn, compared to 2010's £25.6bn.

The statistics also showed the ISA market suffered in November and experienced net outflows of £28m, its highest outflow since February 2009 and a dramatic year-on-year drop from £125m. Year to date net ISA sales totalled £3.2bn, lagging 2010's £3.9bn.

For further analysis, see last week's Investment Week article on investor inflows and outflows across the UK retail market in 2011.