Retail managed funds suffer investors' snub

By MARK FRYER

The bad news continues for the managed funds business, with investors withdrawing a net $127 million from retail managed funds in the three months to the end of September.

Researcher Fundsource says the outflow was the biggest it has recorded in the 10 years it has been keeping the numbers.

The latest outflow comes on top of the net $83 million which investors withdrew from managed funds in the previous quarter, to the end of June.

The withdrawals, combined with falls in the value of investments held by the funds, mean the amount managed by the industry shrank by almost $750 million in the latest three months, from $18.16 billion to $17.43 billion.

The loss of faith was particularly pronounced among investors in diversified funds, where withdrawals exceeded new investment by $253 million.

And while many investors have been focusing on the falls on overseas sharemarkets, local share funds did not escape, suffering a net withdrawal of $28 million,

The only bright spots for managers were mortgage funds and New Zealand cash funds, which together attracted $220 million.

But amid the flight to security there was one sign of a move in the other direction; international sharemarket funds attracted a net inflow of money, although it amounted to only $2 million.

Out of the 29 fund managers covered by the survey, 18 suffered net outflows, says Fundsource.