UK and US equities bore the brunt of the 76% decline in fund sales in July following a record-breaking 2017.
According to the latest Investment Association (IA) figures the North America sector lost £292 million over the month, the biggest outflow of any sector. This is in stark contrast to £1.2 billion investors poured into the sector in the first half.
Meanwhile UK-focused funds lost £315 million, with the UK All Companies and UK Equity Income sectors losing £292.7 million and £203.6 million respectively.
Overall, July marked the third consecutive month of outflows for equity funds, with investors pulling £249 million from the asset class.
IA chief executive Chris Cummings said: ‘Amid trade tensions, the story remains one of equity outflows and waning risk appetite.
‘Within the equity sectors, the UK is still firmly out of favour amid Brexit uncertainty, with outflows totalling £3.5 billion since the beginning of the year.’
Inflows elsewhere helped offset equity weakness, including £549 million for mixed asset funds and £279 million for bond funds.
The global sector was the best-seller overall, registering inflows of £397 million.
Meanwhile property fund inflows bounced back to their highest levels since the Brexit referendum,witnessing purchases of £163.6 million in July.
‘July saw the biggest inflows to property funds since the Brexit vote, which had marked a scramble by investors to redeem money held in the funds,’ said AJ Bell analyst Laura Suter.
‘While assets remain far from their pre-referendum high, it shows investors are dipping their toe back in the water.’
These inflows helped lift overall fund sales to £977 million. However, this marked a huge 76% slump in the £4.1 billion inflow achieved in July 2017.
IA chief executive Chris Cummings said: 'Net retail sales were positive in July as savers placed almost £1 billion into UK authorised funds. However, amid trade tensions, the story remains one of equity outflows and waning risk appetite.
'Fixed income and mixed asset funds attracted strong inflows, as did Volatility Managed funds. Within the equity sectors, the UK is still firmly out of favour amid Brexit uncertainty, with outflows totalling £3.5 billion since the beginning of the year.'
Hargreaves Lansdown analyst Laith Khalaf added: 'Investors continue to show caution when it comes to putting money in the stock market. July’s retail sales are down 76% on a record-breaking year in 2017, with investors shunning equities in favour of bonds and mixed asset funds.
'Flows into the latter are underpinned by large swathes of pension money flowing into default funds, so we can expect these funds to gather assets in a range of market conditions.'