Equity funds record highest month of net inflows since 2015

April saw investors plough £3bn into equity funds while outflows from property slowed significantly


Equity funds experienced the highest month of net inflows in April since 2015, according to Calastone data.

The funds network found £3bn flowed into equity funds last month – the best month since Calsatone launched its fund flows index in 2015 – taking the total for the year to £6.9bn.

It said inflows matched the success of the vaccine rollout with the UK and North America reporting record flows, and global funds taking the lion’s share, while the appetite for European equities slowed.

Global funds took in £1.6bn, while North American funds absorbed £576m and UK equity funds received £303m. Just £27m flowed into European equity funds in April.

Calastone said in the past three months, UK equity funds have recouped all the outflows from the previous six months.

Outflows from equity income funds slowed as investors saw signs of the dividend drought ending, although the asset class remains out of favour. In April outflows were £50.2m, having reached £6.3bn by the end of March.

More money being pumped into active than passive

Active funds have now seen more inflows than passive in five of the past six months. Active accounted for 70% of April’s equity inflows with non-ESG funds taking in £1.4bn compared with ESG funds’ £692m.

Last month also saw outflows from property funds slow significantly, by 86%, due to rising investor optimism as the UK gets nearer to normality post-lockdown. In April, £81m flowed out of property funds, a significant reduction from £572m in March.

Overall, inflows across all asset classes hit £6.1bn in April, a record high on a one-month basis.

Calastone head of global markets Edward Glyn said: “The pandemic is claiming more lives than ever around the world, but in the UK and North America it is in retreat, the situation in Europe is improving, and it remains under control in most parts of Asia. Stock markets have been on a gently rising trend, while bond yields which are bad for share prices when they rise, have been steady.

“Investors are looking to the post-pandemic boom that seems increasingly likely to take off in a synchronised fashion across the developed world. Households are sitting on top of record balances of unspent cash. Some has been doubtless earmarked for a bit of much-needed frivolity, but they are investing some of it too and funds are seeing inflows surge as a result.”