Calastone: Equity funds suffer one of worst months for outflows

ESG equity funds see largest outflows on record


Equity funds have suffered one of their top 10 worst months for outflows ever recorded by Calastone, according to the firm’s latest data, which found investors withdrew £662m from them in June alone.

Investors removed a total of £1.1bn during the month, with mixed asset and property funds losing £384m and £79m respectively. There were net inflows into funds across the piste during June however, with investors piling £880m into fixed income vehicles and £503m into money markets – the latter of which saw its second-strongest month on record – totaling flows of £1.4bn.

Edward Glyn, head of global markets at Calastone, said: “Fixed income funds and their money market cousins have not looked so attractive since before the global financial crisis. At the same time, recession fears are stalking equity and property markets – investors are nervous.

“The result is a flight to safety. Money markets currently enable investors to earn an income of 5% or more at very low risk, while fixed income funds, which invest in longer-dated bonds than money market ones, offer the chance to lock into the highest yields in years.”

Polarised equity flows

Within equity funds, global and emerging market vehicles still managed inflows during June, with EM mandates enjoying their best six-month run of inflows on record at £1.6bn.

Technology funds also fared well, with tech specialist funds enjoying their biggest inflows since December 2021 at £50m.

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In contrast, ESG funds suffered their worst month on record with outflows of £369m, while UK and North American equity funds saw investors withdraw a respective £612m and £542m of capital.

“Investors have increasingly focused their buying on global equity funds in recent years,” Glyn said. “Inflows of £50bn since 2015 have been funded by sales of UK, European and income funds in particular, as well as newly saved capital.

“Alongside a structural investor preference for global funds, from time-to-time different regions come into favour. Emerging markets funds are having just such a moment… as investors leap on relatively low valuations, on the benefits to emerging markets of a weakening US dollar and of the impending turn in the credit cycle.”

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