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Investors flee UK equity funds

by LLB Editor
4th Oct 19 8:18 am

Investors yank another £700m from UK equity funds in August. UK property funds outflows hit £1.2bn over the past year. Funds saw £1.7bn of money pulled in August.

Laura Suter, personal finance analyst at investment platform AJ Bell, comments on the latest Investment Association figures for August.

Suter said, “The summer months failed to see UK investors heating up their appetite for the UK stock market, with another £700m pulled from the funds in August, wiping almost £4bn out of UK equity funds over the past year alone. But the UK isn’t alone, with funds focused on Europe seeing almost £500m of outflows in August. In fact every major equity market saw outflows or at best very modest inflows – for example, the biggest inflows were for global funds with a measly £70m of inflows.

“Investors’ flutter with bond markets in July appeared short lived, with almost £1bn pulled from bond funds in August, following the more than £2bn of inflows we saw the previous month. Strategic bond funds were the biggest losers, with more than £750m of outflows, ending the sector’s run of being in favour so far this year. It would seem investor worries about the lack of a clear direction from the Bank of England on interest rates, as well as changing monetary policy in Europe and the US and the soaring levels of negative interest on bonds have caused them to cool on fixed income.

“If they squint, Absolute Return fund managers could see a glimmer of light as outflows from the sector slowed to their lowest level for a year. However, investors are hardly warming to the funds with almost £200m pulled from Absolute Return funds in August, taking total outflows over the past year to an eye-watering £6.1bn.

“Worries about the retail sector and the impact of Brexit on the office market continue to fuel withdrawals from UK property funds, taking outflows to £1.2bn over the past year. Property funds have been shoring up cash to meet redemptions, with the FCA’s focus on liquidity rules this week highlighting the potential problems investors face in these funds should withdrawals increase.”

 

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