UK retail investors added a net £1.36 billion to funds in March, marking a fifth consecutive month of inflows, albeit at a slower pace than February, according to the latest Investment Association data.
The data shows a clear shift towards defensive positioning, following a tempered return to equity markets through index trackers in the first two months of the year.
The IA said investors favoured cash-like assets and diversified strategies, with record inflows into money market funds at £2.01 billion and continued demand for mixed assets.
The data shows flows proved relatively resilient despite geopolitical tensions and ongoing conflict in the Middle East.
Miranda Seath, director, market insight & fund sectors at the Investment Association, said: “March marked a fifth consecutive month of positive net retail sales with inflows of £1.36 billion, albeit at a slower pace than February.
“As geopolitical uncertainty intensified with the outbreak of conflict in the Middle East, investors became more cautious with a clear shift towards defensive positioning. Record demand for money market and higher inflows into mixed asset funds highlights an ongoing focus on liquidity, diversification and risk management.”
However, equity fund outflows widened to £1.3 billion, compared with £445 million in February. Investor demand across regions was mixed, with Europe and Global the only regions to record inflows at £29 million and £135 million respectively. In contrast, North America returned to outflows of £240 million, following February’s £417 million inflows.
Fixed income funds also returned to outflows, with investors withdrawing £966 million, following four consecutive months of positive sales.
In addition, responsible investment funds saw outflows of £483 million, including £537 million from SDR-labelled funds.
Seath added: “Looking ahead, investors will continue to monitor geopolitical developments and their impact on the macroeconomic environment. 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.”
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