Worst Month On Record For Investment

During January, private investors withdrew £550m ($1.08bn) from unit funds and trusts. This makes January that worst month ever recorded for the investment market.

According to the Investment Management Association, January is usually the ‘Isa season’ which is when private investors would usually set up tax-efficient savings accounts in anticipation of the end of the financial year, however this area too has experienced a very underwhelming kick-off.

Sources from within the industry have stated that last month was the worst ever in outgoing Isas. However this is in stark relief to other investment areas, such as building societies and government-backed National Savings and Investments, which have announced strong forward movement in cash-based products areas.

The fourth quarter of 2007 was the worst on record for the industry, and this new outpouring of investment is right on the tail end of those two months of net reductions from retail investors.

CEO of IMA has stated that January was merely an extension of the outflowing of the final quarter in 2007 and whilst this Isa season may well be a less involved one, the outflows were none the less reduced by nearly half of the previous months.

Isas however saw a withdrawal of £68 last month as compared to inflows of £17m for December and inflows of £30.9m this time last year.

Across the whole industry there is low expectations for performance in the Isa markets this year, as many investors will likely be thinking to hold off on investment until markets are more stable and certain later in the year.

Industry analysts say that investors have lost confidence in shares because of the combined negative experiences of falling financial markets and property prices and fears of recession and the Northern Rock crisis.

Property net outflows were just £77m for January, where they were £242m in December and £253m November. Though some investors have sought the more cautious fund balanced investments in equities and bonds, which in December and November offset some of the redemptions in the equity funds field.

Equity fund outflows remained fairly on par at £867m for January and £854m for December. However sales in balanced funds investments did slow noticeably to £85m in January from £154m in December, and bonds funds also saw a reduction from from £184m in December to £151m last month.

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