Elizabeth Howcroft
LONDON (Reuters) – British investors rose from a record £2.4bn (2.23 $100 million) equity funds in September withdrawn from fund network Calastone said Wednesday.
Calastone said net outflows made September the worst month of the year for equity funds on record.
Funds focused on UK equities were hit the hardest, with 694 £1m worth of sell-offs out for the 16th consecutive month, Calastone added. U.S. equity funds also saw their biggest outflows on record.
Outflows have highlighted a lack of investor confidence in the UK this year, which in recent weeks has led to a surge in government bond yields in September 23 And the huge unfunded tax cost of the pound plunging.
“The near-permanent lukewarm attitude towards UK assets shows no sign of thawing,” said Edward Glyn, Calastone’s head of global markets.
Overall equity fund outflows reached £4.7 billion in the third quarter, exceeding the entire 2016 outflow.
Global markets have been hit hard in recent months as major central banks raised interest rates to combat high inflation despite slowing economic growth.
“The surge in global bond yields is driving a dramatic repricing of various assets,” Green said.
Green attributes record U.S. outflows to growth stocks’ sensitivity to interest rates, saying emerging markets are hurt by recession prospects and a stronger dollar, citing a loss of momentum in China as an explanation Calastone said, Inflows to fixed-income funds, excluding equities, “dipped sharply” in the last week of September as markets reacted to the UK government’s fiscal plan.
Environmental, social and governance (ESG)-focused funds also posted losses, with their first overall outflow in more than three years, Calastone said.
Real estate fund also Calastone said outflows rose sharply in September, with net outflows 89 million pounds, due to a sharp drop in buying interest. Glyn said it was “not a property-specific issue.”
Chart: UK Funding Equity Flows (https://fingfx.thomsonreuters.com/gfx/mkt/jnpweqjrjpw/UK%20 Funds % Equity % Flow. png)
($1=0.8771 pound)
