All asset classes experienced withdrawals simultaneously for the first time since January 2019, when assets were offshored prior to Brexit, as investors adopt a risk-off sentiment.
Investors pulled £4.3bn out of funds in May, the highest outflows since March 2020's £7.5bn as inflation, interest rates and a worsening economic outlook wrought havoc on markets, according to the latest Morningstar UK fund flows.
Active equity funds suffered the most, accounting for four fifths of the month's net redemptions at £3.4bn. UK large-cap, Europe ex-UK and global large-cap growth had the highest withdrawals, with both passive and active funds bearing investor outflows.
Outflows have followed the continued short-term poor performance in quality and growth-oriented funds. For the top 15 active equity strategies with the highest net redemptions, the majority had a growth style bias, either outright or at least versus their respective benchmarks.
Morningstar: European equity funds return to positive territory in April
Despite having enjoyed inflows in recent years, May saw outflows for allocation strategies for only the second time in as many years. Sustainable funds in this area have usually powered inflows, but they only contributed a net £121m last month.
Fixed income funds fared slightly better than equity vehicles, but also saw outflows in May as part of the wider risk-off activity by investors. GBP corporate bonds registered its largest monthly outflows since January 2015, but the equivalent short-term category received inflows of £271m.
Aviva, Blackrock and Baillie Gifford each had outflows of £1bn or more, while the market's largest fund - Fundsmith Equity - saw its largest ever monthly outflow of £622m after its worst start to a year since launch.
