UK advisers ditched property funds in general election month

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UK advisers switched out of property in June as the general election delivered political uncertainty as part of a wider reduction in domestic bias during the second quarter, analysis by Natixis Global Asset Management shows.

The latest quarterly Portfolio Barometer shows sentiment towards direct UK property shifting, with negative flows in June, despite positive flows in April and May.

Investment Association net sales data tells a similar story with net outflows of £2m from Property funds, compared to inflows of £56m in May and £69m in April.

Natixis, whose Portfolio Research & Consulting Group completed the analysis of advisers’ model portfolios and asset allocation decisions, says UK advisers “continue to fall out-of-love” with the UK in Q2.

Conservative models increased absolute return exposure, moderate upped fixed income and aggressive shifted equity away from domestic exposure.

Portfolio Research & Consulting Group senior consultant Andrew Kinsey-Quick says the trend appears to be continuing, with reallocation from domestic to global equities.

Sales data from The Share Centre from July shows investors ditching UK exposure for global equities with Neil Woodford’s Income Focus fund falling out of focus out of its best-selling fund list.

“Within the Fixed income space we have seen some growth in domestic exposures but a more notable growth in non-domestic fixed income,” Kinsey-Quick notes.

“The reduction in domestic bias is positive as international assets should provide much-needed diversification in the event of the UK suffering a hard Brexit – from both currency in the short term and asset returns in the longer-term.”

However, Tilney Group managing director Jason Hollands has previously warned the FTSE 100 in aggregate has more revenues exposure to emerging markets and Continental Europe than the UK.