Investors plough record £2.6bn into equity funds in April
Calastone data
Investors poured a record £2.6bn into equity funds in April as they looked to benefit from a relief rally in stockmarkets after a sharp fall during February and March, data from Calastone show.
Following two months of net outflows from equity funds and inflows for cash products while markets plunged on concerns over Covid-19, that trend reversed dramatically in April.
Global equity funds, at £1.1bn, were in demand last month, with UK equities not far behind on £1bn, while money market funds were the only asset class to suffer outflows, according to the funds network's latest Fund Flow Index (FFI).
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The Calastone FFI:Equity jumped to 57.1, its highest reading in three years - where a reading of 50 means the value of buy orders equals the value of sell orders.
That said, the firm noted the reason for the high reading was due to an elevated churn rate on funds, with investors switching between offerings, rather than lots of buying and little selling.
Calastone explained each of the four months of 2020 have seen record transaction volumes in equity funds.
The data show investors "scrambled to add to their fund holdings, eager not to miss the best month for markets in 40 years", according to Edward Glyn, head of global markets at Calastone.
"High trading volumes reflect the exceptional uncertainty in global markets - as the pandemic crisis has unfolded, investors have had to constantly assess and reassess the valuation of assets and prospects for the economy," Glyn added.
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Meanwhile, appetite for active funds bounced back, with inflows split 50:50 between active and passives. That said, with the FFI:Equity Index showing up at 64.6, here were almost twice as many buys of index funds than sells, the equivalent active index was just 54.6, suggesting much busier two-way trading.
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