Market volatility prompted investors to cash in £3.94 billion of equity funds in the first three months of the year.
Analysis by behavioural finance expert Oxford Risk shows market panic set in at the start of the new year, following policy changes from the Trump administration.
Equity funds were the hardest hit with Money Market Funds seeing £1.262 billion in net retail sales across the period. The analysis of Investment Association data shows net retail sales of funds across all sectors were minus £2.96 billion.
The worst-selling sector ranked by the Investment Association in each of the last three months was UK All Companies, while the bestselling sectors have been Volatility Managed in January, Global in February and Short-Term Money Market in March.
Oxford Risk warned that knee-jerk emotional reactions to market swings costs investors an average of 3% each year in returns.
James Pereira-Stubbs, chief client officer at Oxford Risk, said: “Retail investors have understandably been caught up in the market panic and the £3.94 billion pulled out of equity funds shows that.
“Markets are likely to remain volatile for the foreseeable future as investors react to the latest news whether it is regarded as good or bad with the views often changing during the trading day.
“Retail investors need to focus on their long-term financial plans and not rush to buy or sell based on macroeconomic news and policy decisions which can and have changed very quickly.”
Oxford Risk says behaviourally-driven financial advice software can help investors and advisers avoid emotional mistakes which typically include chasing current and popular themes, trading stocks too much and selling when markets are falling.
Pereira-Stubbs added: “Advisers need technology support so they can provide personalised engagement that helps people get invested, stay invested, and make better decisions throughout their journey.
“By addressing individual needs and behaviours, financial firms can turn missed opportunities into better outcomes for investors.”
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