February was the worst month for equity funds since July 2020, as capital flowed out of products in response to Russia's invasion of Ukraine, according to the latest Calastone survey.
Investors abandoned the region, while there was a slight increase in sellers, and inflows fell to £42m over the month, 96% lower than the average monthly inflow over the last year, representing a 79% month-on-month drop compared to January.
According to Calastone, funds had inflows of £646m up until 23 February, though as Russia invaded, investors withdrew £604m during the last three days of trading.
Head of global markets at Calastone, Edward Glyn, said: "Investors have a lot to worry them at present. Stock markets have certainly fallen since the Russian army invaded Ukraine, but the falls have not indicated a rout."
"This is reflected in equity fund flows - buyers have gone on strike, rather than sellers going hell-for-leather, suggesting that caution is the name of the game, rather than a rush for the exits. Buyers have simply opted to sit it out on the side-lines for the time being."
Calastone: record month for UK fund outflows
Fixed income investors were more cautious, according to the data, though the asset class had a month of outflows for the first time since the start of the pandemic, when they totalled £517m.
February was the second month in three years where bond funds had outflows. They were most impactful at the end of the month, when investors sold £204m.
Funds flowed out of fixed income products over the entire month, however, as inflation continued to rise, and investors looked for havens elsewhere.
Like equities, outflows were driven by a lack of buying, as opposed to a sharp rise in selling.
Funds flowed out of property markets as well, totalling £148m, the worst figure since June 2021, according to Calastone.
