Nervous investors quit equity funds at record pace

Equity funds have now seen net outflows in four of the past five months, after more than two years of net inflows, the IMA said. Photo: Alamy

British investors pulled out a record £864m from equity funds, compared with monthly average inflows of £506m for the previous 12 months.

Equity funds have now seen net outflows in four of the past five months, after more than two years of net inflows, the IMA said.

Savers holding funds in tax-efficient Isas also gave up on shares, with £28m being withdrawn.

Not surprisingly, investors who continued to invest opted for safer havens, such as corporate bonds and balanced funds, which invest in a mixture of shares, bonds and cash.

Bond funds saw sales of £443m in November, a marked increase on its monthly average of £332m.

UK Absolute Return funds were the second most popular, with £164m in net retail sales in November, the highest level since June 2011 and well above the monthly average of £81m for the previous 12 months.

Financial advisers said investors always reacted with panic when markets wobble.

Mark Dampier at Hargreaves Lansdown said: "I am not surprised that investors have been selling out of equities. Every time you turn on the radio, the TV or open a paper there is something about the eurozone debt crisis.

"The public is pessimistic, and this is priced into the markets. Usually pessimism in the market means it is a good time to buy, but you can understand why investors do not want to take the risk."

Richard Saunders, chief executive of the IMA, said: "The second half of 2011 has seen a marked slowdown in fund sales from the exceptionally strong levels of the last three years, and there was no let up in November, which saw the lowest monthly net sales since October 2008."

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