Cash has continued flooding out of UK property funds as investors grow increasingly anxious about the sector following the suspension of the M&G Property Portfolio.
The IA Direct UK Property sector recorded its 13th consecutive months of outflows in October, as investors pulled £148m over the month. In the last 13 months £1.8bn has fled the sector.
AJ Bell personal finance analyst Laura Suter (pictured) said fears about the impact of Brexit on property prices and fund liquidity after the Woodford saga had driven investors out of UK property funds.
But she said following the suspension of the £2.5bn M&G Property Portfolio “all eyes will be on the outflows from the sector”.
“The M&G closure shouldn’t be a reason for panic selling across the sector, but instead it’s a good time for investors to check the cash levels in their funds, assess the liquidity in those portfolios and ensure they are comfortable with the holdings,” she said.
Absolute return and UK equity funds continue leaking cash
There was also no let-up in redemptions from the absolute return sector.
Absolute return funds were hammered even harder than UK property funds during October, racking up net outflows of £566m, making it the worst selling asset class that month.
“Total outflows since last summer are now almost £7bn and don’t look to be letting up any time soon,” Suter said.
UK equity funds registered another month of outflows though the amount of money pouring out “slowed dramatically,” Suter noted. Only £6m was yanked from UK equity funds in October compared with £676m in September.
While investors waded back into certain equity markets like North America (£317m), global (£225m) and Asia ex-Japan (£154m) bonds remained the asset class of choice.
Fixed income funds saw £1.3bn of money coming in, double the £648m that equity funds drew in during the month.
The Sterling Strategic Bond sector was the top selling asset class, attracting £423m in net inflows, but investors were also willing to put money into Global Bonds (£215m) and the Specialist (£122m) sectors.
