Recent fund flows data suggests investors have been withdrawing money from the market rather than waiting for it to rebound.

According to Morningstar’s asset flows report, in June investors redeemed £2.6 billion from open-ended UK equity funds.

This chimes with recent announcements from asset management firms.

Blackrock (BLK:NYSE), the world’s largest asset manager, recently reported nearly $10 billion of outflows in the quarter to the end of June, and a larger fall in profit than expected.

In a similar vein Premier Miton’s (PMI:AIM) assets under management fell 8% to £12.8 billion in the six months to 31 March, as investors pulled £279 million from the group’s equity funds.

Polar Capital (POLR:AIM) experienced a 14% decline in assets under management in the three months to June, in part due to net outflows of £316 million and fund closures of £459 million.

Liontrust (LIO) suffered £500 million of net outflows over the same period, the majority accounted for by UK retail funds.

Some of these asset managers are small cap specialists and redemptions are problematic for UK smaller company funds, particularly with people rushing to exit what are already illiquid stocks.

In order to give investors their money back portfolio managers may be forced to sell investments at big discounts.

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