Retail investors cashed-out a net £3.94bn from equity funds amid market panic early this year, according to Oxford Risk.
Net retail sales of equity funds in the first three months of the year were in minus billions as fear over a trade war grew owing to the tariff polices of the Trump administration.
Equity funds lost out heavily to money market funds, which saw £1.26bn in net retail inflows across the period.
The VIX index, which measures volatility, hit a remarkable 52 in early April, Oxford Risk noted. A measure above 30 is seen as high volatility.
Oxford Risk pointed to behavioural factors as a major component of this. Such extreme reactions can be highly detrimental to investment returns, with selling into a market slide often leaving investors offside as prices bounce back quickly.
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The firm said “knee-jerk emotional reactions” to market swings cost investors an average of 3% each year in returns, and that figure could be much higher this year.
James Pereira-Stubbs, chief client officer at Oxford Risk, said: “Retail investors have understandably been caught up in the market panic and the £3.94bn pulled out of equity funds shows that.
“Markets are likely to remain volatile for the foreseeable future as investors react to the latest news whether it is regarded as good or bad with the views often changing during the trading day.
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“Retail investors need to focus on their long-term financial plans and not rush to buy or sell based on macroeconomic news and policy decisions which can and have changed very quickly.
“Advisers need technology support so they can provide personalised engagement that helps people get invested, stay invested, and make better decisions throughout their journey.”
