UK equities experienced the second-worst monthly outflow on global funds network Calastone’s record books in September as a cocktail of negative events hit the domestic market.
According to Calastone figures, bearish investors pulled £567m out of UK equity funds during the month, with active equity funds accounting for 98% of the total.
UK equity funds have seen net outflows in 10 of the past 14 months, according to the data, with only February, March, April and May of this year in positive territory.
Calastone said investors clearly singled out UK-focused equity funds in September because in the worst month in Calastone’s seven-year records, June 2020, heavy selling was more balanced across almost all equity categories.
However, UK ESG funds saw inflows during September, as did most other categories. Emerging market funds experienced record inflows of £407m, global funds £805m, North American funds £230m, and European equity funds added a modest £37m.
But equity income funds, which are heavily allocated towards UK equities, suffered outflows in common with the pure UK-equity strategies.
The UK’s poor showing dented the overall flows picture, with September seeing a net £450m inflow into all equity funds, down from £1.3bn in August.
Calastone head of global markets Edward Glyn said: “The petrol panic, soaring inflation, empty supermarket shelves, fractured supply chains, crippling staff shortages and turmoil in gas and electricity markets are all taking their toll on investor confidence. With so much going wrong so quickly, investors have voted with their feet and dumped UK assets.
“Investors know that other parts of the world are also experiencing some of these difficulties, but inflows to funds focused on other regions emphasise that they realise the problems are more widespread and more acute in the UK than elsewhere.
“It has been an unusually hapless month for the UK. We have all strapped in for a bumpy few months of news ahead, so we should also brace for further volatility in fund flows for UK equities.”
