UK equity monthly outflows worsen

UK-Currency-Money-Coin-Pounds-GBP-700x450Investors continue to shun UK equities with the region seeing outflows of £620m in September, compared to £162m in August, according to the latest figures from the Investment Association.

Overall, total net retail fund sales for the month were over 60 per cent down to £664m from £1.7bn in August.

The UK All Companies sector with net retail outflows of £632m.

Equity funds across geographies saw outflows of £333m in September, an improvement on the £629m outflows in August. These funds have seen outflows every month in 2016 so far.

Inflows into fixed income funds slowed to £100m compared to £1.2bn a month earlier. The same asset class saw £1.6bn outflows in September 2015.

Interestingly, mixed asset funds were the winners of the month, with net retail sales of £374m, consistent with August flows of £409m and £310m in September last year.

Of these funds, the 40-85% Shares was the most popular mixed asset sector in absolute terms, but the 0-35% shares sector is said to be experiencing the greatest growth across all sectors, the IA says.

Money market funds followed mixed asset funds with £297m retail sales.

Investment Association fund market specialist Alastair Wainwright says: “Caution was again evident in September as investors moved out of equity funds in favour of arguably less risky mixed asset and money market funds.

“Property fund sales were positive in September as advised and non-advised retail customers bought into the sector, however, discretionary fund managers continued to reduce their holdings in property funds.

Architas investment director Adrian Lowcock says the IA figures reflect “a lot of uncertainty” surrounding markets in September as well as little direction on where the best investment opportunities were.

He says: “The sales figures show that the UK continued to be impacted by Brexit as investors drew money out of the region. However, the initial sell-off in property funds as money flowed out of the sector is being reversed as investors returned to the asset class.

“September’s figures also show money flowing out of bonds and with yields risings further in October this is a trend we could continue as investors begin to see significant losses on their bond investments.”