Retail investors have pulled money from UK equity funds after year-to-date loses in all but a handful of products, according to the latest Investment Association figures.
UK equities suffered £214m outflows in October, according to the IA figures for the month that saw global stock markets suffer a tech-led sell-off. Despite the volatility, equities as a whole took in £100m over the month making it the third best-selling asset class.
Most funds across UK equities suffered heavy losses this year, said AJ Bell personal finance analyst Laura Suter.
The £2.2bn Schroder Income fund, managed by Nick Kirrage (pictured) and Kevin Murphy, and £1.2bn Income Maximiser fund and £34.1m Gresham House UK Multi Cap Income fund are the only products in the UK Equity Income sector to deliver positive returns in the period to 6 December 2018.
The Schroders funds have delivered a meagre 2.7% and 1.53% respectively over the period, while the Gresham House fund, managed by Ken Wotton and acquired from Livingbridge in November, returned 0.91%, according to FE Analytics.
However, these returns are substantially stronger than losses of 10% in the FTSE All Share and 12% in the FTSE 250.
UK equity funds have now seen outflows for 18 months, said Tilney managing director Jason Hollands. Since the Brexit referendum campaign kicked off in early 2016, investors have pulled £12bn from the asset class.
But Hollands said: “The UK equity market and the UK economy are not one and the same thing. Such negativity means UK shares are trading at a notable discount to other developed markets, creating opportunities for investors prepared to go against the herd and focus on the fundamentals.”
In the UK All Companies sector there are 12 funds that have delivered positive returns in the year to date, led by SDL UK Buffettology (4.55%), MFM Bowland (4.46%) and Evenlode Income (3.68%).
Largest outflows since the Brexit referendum
Across all asset classes, retail investors pulled £1.6bn from the UK funds industry, substantially down from £5.3bn net inflows in October 2017.
Investment Association chief executive Chris Cummings said this was led by fixed income funds, which have suffered as the end of quantitative easing in the US and Europe nears. “This declining appetite for bonds has contributed to UK funds experiencing their largest net retail outflow since the EU referendum, although it remains to be seen whether this is the start of a broader trend within fixed income.”
North America funds were the best-selling sector within equities gaining £122m, despite the region being the epicentre of the October sell-off with large-cap tech stocks leading markets down. Hollands suggested the pick up in equity fund inflows could be due to bargain hunting.
