Investment Week

Investors' confidence in UK equities plummets further with £315m in outflows

Worst-selling equity region

Investors exited UK equities in July
Investors exited UK equities in July
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Investors are fleeing developed market equities in favour of fixed income and multi-asset funds, according to the latest Investment Association statistics, as UK, US and Europe equities all see outflows.

In the latest monthly statistics for July, the worst-affected equity region was the UK, which saw outflows of £315m. This combines the UK All Companies, UK Equity Income and UK Smaller Companies sectors.

This is on the back of £339m outflows from UK equities in June, indicating investors are becoming less confident in the region as Brexit approaches. 

European funds, including the Europe ex UK, Europe inc UK and European Smaller Companies sectors, saw outflows of £156m, an improvement on the £280m outflows seen in June.   

The most popular sector was Global with inflows of £397m, marking 12 consecutive months of inflows for the sector. The specialist sector also jumped from 30th place in June to fourth most popular with net retail sales of £166m.

'Uncertain political landscape' drives net fund sales to lowest in 18 months

North America saw outflows of £292m during the month, compared to inflows of £243m in the previous month, making it the worst-selling IA sector. 

Mixed investment funds were the best-selling asset class and saw net retail sales of £549m. Within this, the most popular sector was the Mixed Investment 40%-85% Shares sector, which had net retail sales of £270m, the second best-selling IA sector. 

Fixed income saw inflows of £279m while the most popular sector was UK Gilts with inflows of  £118m, although £ High Yield, Global Bond and Global Emerging Market Bonds all reported outflows. 

'Uncertainty remains the word of the moment' as asset managers prepare for no-deal Brexit

Chris Cummings, chief executive of the Investment Association, commented: "Net retail sales were positive in July as savers placed almost £1bn into UK authorised funds. 

"However, amid trade tensions, the story remains one of equity outflows and waning risk appetite. 

"Fixed income and mixed asset funds attracted strong inflows, as did volatility managed funds. Within the equity sectors, the UK is still firmly out of favour amid Brexit uncertainty, with outflows totalling £3.5bn since the beginning of the year."

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