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The 11 funds dumped in 'annus horribilis' for sales

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The 11 funds dumped in 'annus horribilis' for sales

Eleven funds each saw more than £1 billion leave the door last year, in a grim year for global stock markets that sparked the biggest quarterly exodus from retail investors of all time. 

Fund sales figures released yesterday showed retail investors pulled £6 billion from funds in the last three months of 2018, dragging down annual net sales to £7.2 billion, a huge fall from 2017's £48.5 billion.

Laith Khalaf, senior analyst at Hargreaves Lansdown, labelled the year an 'annus horribilis' for fund groups.

Figures compiled by analysts at Numis Securities, using data from Morningstar, show which funds were worst hit by the investor exodus.

Fund 2018 withdrawals Assets
SLI Global Abs. Rtn Strategies £8.3 billion £11.3 billion
Newton Real Return £2.7 billion £7.5 billion
LF Woodford Equity Income £2.4 billion £4.7 billion
M&G Optimal Income £1.5 billion £20.2 billion
iShares UK Equity Index £1.5 billion £8.6 billion
Invesco High Income £1.2 billion £7.5 billion
BR ACS 50:50 Global Eq Trk £1.2 billion £7.2 billion
AXA Framlington UK Select Opps £1.1 billion £1.8 billion
Schroder Glb Quant Act Val £1.1 billion £1.2 billion
Undrly AI UK Eq Insured GBP £1.1 billion £104 million
Invesco Income Fund (UK) £1.1 billion £3.3 billion

Source: Numis Securities, Morningstar

Investors' flight from UK funds following the Brexit vote has been a consistent feature and 2018 saw that trend continue, with retail investors pulling £4.9 billion over the course of the year.

But look beyond that headline figure and it's clear that Brexit fears are not the only factor at play. 

Six funds focused on the domestic stock market were among those to suffer redemptions of more than £1 billion. 

Of these, four are facing their own particular challenges beyond investors' shunning of UK stocks due to Brexit fears.

Neil Woodford's performance difficulties are well documented and investors have been fleeing his fund as a result. Investors pulled £2.4 billion from his flagship Woodford Equity Income fund in 2018. Now standing at £4.7 billion, the fund has halved in size since peaking at £10.1 billion in the summer of 2017.

Woodford's successor at Invesco, Mark Barnett, is also in the midst of a prolonged patch of poor performance. Investors pulled a combined £2.5 billion from his Invesco Income and High Income funds in 2018.

Outflows which kicked off when Woodford announced his departure from Invesco more than five years ago are now being driven by Barnett's fall towards the bottom of the performance charts. The combined assets of the two funds have more than halved over that period, from £23.7 billion in October 2013 to £10.8 billion today.

Investors in the AXA Framlington UK Select Opportunities fund have been contending with not only the knock to performance following the Brexit vote, but the first change in manager in over 16 years. Veteran investor Nigel Thomas handed over the reins to Chris St John at the turn of the year. Investors pulled £1.2 billion from the fund in 2018.

The £1.5 billion withdrawn from iShares' UK Equity Index tracker fund arguably reflects a more straightforward investor verdict on the prospect for UK shares.

The Morningstar figures reflect both retail and institutional flows, and it's likely the latter that's responsible for the £1.1 billion withdrawn from an otherwise obscure Aviva Investors UK Equity fund.

No other fund available to UK investors comes close to the huge £8.3 billion withdrawn from what was once the largest fund in the UK: Standard Life Investments Global Absolute Return Strategies (Gars). 

The underperforming absolute return fund topped the list for the second year running, following 2017's £5.6 billion outflow.

With assets having fallen from £27 billion at their peak to £11.3 billion at the end of December, according to Morningstar, the fund is now not even the largest in its sector.

That mantle has been assumed by Invesco Global Targeted Returns, run by a trio of former Gars managers, whose fund has swelled to £11.8 billion at the end of December. 

Together with the £2.7 billion withdrawn from Newton Real Return, the exodus from Gars was the driving force behind the £3 billion retail investors pulled from absolute return funds in the second half of 2018.

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