2023 Starts Positive For Fund Flows But Uncertainty Remains – IA Data

UK investors put £1.4 billion into funds in January, following December’s outflow of £281 million, according to data published today by the Investment Association (IA).

Key findings for January 2023 include:

• Bond funds saw the highest inflows in January at £1.6 billion, up from £392 million in December.
• Equity funds saw outflows increase to £913 million in January from £355 million in December.

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• UK equities outflows were £1.4 billion. European equity outflows softened to £155 million. The North America and Asia regions both saw inflows at £363 million and £133 million respectively.
• North America remained the bestselling IA sector for the third month in a row, with inflows of £364 million.
• UK All Companies saw the highest outflow in January for the third month in a row at £1.3 billion, a slight increase from December’s £1 billion outflow.
• Tracker funds continued to see inflows at £982 million in January.
• Responsible investment funds returned to outflow at £259 million in January, following weaker net retail sales in the last quarter of 2022.

Investors Pour Into UK Funds

Emma Wall, head of investment analysis:

“Bond funds saw the highest inflows in January - up 300% from December - with UK Gilts and Corporate and Government Bond leading the bestselling IA sectors. The worst-selling Investment Association sector in January 2023 was UK All Companies, which experienced outflows of £1.3 billion.

European equity outflows saw the smallest outflow since February 2022, when Russia invaded Ukraine. But, one year on from the devastating invasion of Ukraine, investors are re-considering the outlook for Europe. According to the HL Investor Confidence survey, conviction increased particularly in European markets this month. Despite this increase in confidence, the context remains extremely challenging.

This month, the most bought funds are almost all equities – replacing the total return and capital preservation picks we saw hit the tables in times of stress last year. Global equities have fallen back into favour, alongside energy and renewables.

Income is particularly popular, as investors battle the value erosion of rising prices, across both fund and investment trust investors, with four income selections from the Wealth Shortlist featuring in the most bought list, and dividend heroes such as City of London in the most bought trusts list.”

Data from HL's platform: