Investors piled a record £2bn of money into the IA Short Term Money Market sector in March, as tempered equity returns resulted in a consorted push to defensive assets.
According to data published by the Investment Association (IA), total net sales for March hit £1.4bn, which while down on February’s £2.5bn, still marked a fifth consecutive month of inflows.
Equity funds suffered, with outflows accelerating to £1.3bn, while after four month of positive flows fixed income fund flows turned negative, with redemptions totalling £0.97bn.
The second best selling individual sector for the month was IA Targeted Absolute Return, with net inflows of £514m, as demand for mixed assets continued.
“As geopolitical uncertainty intensified with the outbreak of conflict in the Middle East, investors became more cautious, with a clear shift towards defensive positioning,” said Miranda Seath, director, market insight & fund sectors at the IA.
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“Record demand for money market and higher inflows into mixed asset funds highlights an ongoing focus on liquidity, diversification and risk management,” she added. “Investors stepped back from equity markets across most regions but there are signs of selective allocation, including continued demand for global emerging market equities.”
The IA Global Emerging Markest sectors was indeed the third best seller for the month, attracting net inflows of £317m, while appetite remained positive for IA Europe ex UK funds, with the sector taking in £111m.
The story for UK funds however remains the same, with the IA UK All Companies sector witnessing outflows of £350m, making it once again the least popular sector among retail investors.
“Looking ahead, investors will continue to monitor geopolitical developments and their impact on the macroeconomic environment,” said Seath.
“While short-term volatility has led to more cautious positioning, this month’s data suggests that many investors are holding strong and remain committed to their long-term plans, reinforcing the importance of diversification and a disciplined approach to investing.”