Further outflows for UK funds as Brexit uncertainty continues

Jessica Clark
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As the Brexit deadline nears investors are seeking to diversify and manage their risk with global and mixed asset funds, the Investment Association said (Source: Getty)

UK-focused funds continued to experience outflows in August as investor confidence remained dented by Brexit uncertainty, taking the post-referendum total to £10.2bn so far.

Net retail sales outflows were £217m in August compared to inflows of £4.6bn the previous year, according to the latest figures from the Investment Association.

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UK equity funds saw an outflow of £429m while and European equities also saw a drop of £303m, while North America performed better with inflows of £417m.

Investment Association chief executive Chris Cummings said: "The uncertainty in the Brexit negotiations continued to be a key factor denting investor confidence in August, with funds experiencing the first retail outflows since the EU referendum result.

"UK equities remain firmly out of favour, with European equities also experiencing another month of outflows. As the March 2019 Brexit deadline looms, investors are seeking to diversify and manage their risk with global and mixed asset funds attracting strong inflows, as did Volatility Managed funds.”

Global funds was the best performing sector with net retail sales of £417m in August, followed by North America, Japan and Asia.

AJ Bell personal finance analyst Laura Suter commented: "Investors continued to pull money from UK-focused funds in August, with another £423m being withdrawn from the sector.

"This takes the amount of money pulled from UK equity fund managers to a whopping £10.2bn since the Brexit vote 16 months ago.

“Investors’ fondness for spreading their risk around the globe has continued, with global equity funds netting another £417m of inflows in August, while investors also put £66m into North America funds and £47m into emerging market funds.

“However, it seems worries about the Bank of England raising interest rates has led investors to get jittery about bonds. While UK bonds have seen almost £13bn flow into them in the months since the referendum, August marked net outflows of £259m from UK bond funds.

“Just how nervous investors are feeling is reflected in overall inflows in the month. August saw investors pull £217m from funds, compared to more than £4.5bn of inflows in the same month last year – a reduction of 105 per cent.

“Across the industry the amount UK investors actually hold in funds remained pretty flat compared to the month earlier, as rising markets mean that growth in assets compensated for much of those outflows.”

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