Sharp Shift in Fund Flows

Easy Money Tamps Down Volatility

Surging inflation and the outbreak of war in Europe took their toll on investor sentiment in February according to our latest Fund Flow Index.

Key highlights from this month’s FFI:

  • Equity funds saw a surge of outflows following Russia’s invasion of Ukraine, leaving February as the second-worst month for equity funds since July 2020
  • Post-invasion outflows were driven by a sharp drop in buyers and only a modest increase in sellers – suggesting caution rather than a rout
  • Funds focused on all geographies saw outflows following the invasion, but active UK equities funds were hit hardest
  • ESG funds continued to enjoy inflows
  • Fixed income funds suffered the brunt of inflation fears, with outflows accelerating on war news – again a dearth of buyers was more to blame than a surge in selling

Source: Calastone

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