Thursday 7 November 2019 11:50 am

Cautious investors drag equity funds to record quarterly outflows

Cautious savers snubbed equities in September amid ongoing global uncertainty, driving the funds to their highest quarterly outflows on record.

Equity funds saw £1.7bn of outflows in September, the fourth consecutive month of outflows. This takes equities’ total net retail outflows for the third quarter to a record £4.6bn, according to figures from the Investment Association (IA).

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Despite equity funds’ woes overall retail sales returned to net inflows during the month, with savers investing £352m in UK funds.

“Global uncertainty cast a long shadow over stocks and shares in the last quarter,” said IA chief executive Chris Cummings.

“Savers particularly shied away from UK equities,” he added. UK equity funds racked up £676m outflows during September, taking their total outflows for the quarter to a record £2.3bn.

“September was a month where everyone learnt the word proroguing and saw yet more heated Brexit wrangling, unsurprisingly this did little to encourage investors to put their backing behind the UK,” said AJ Bell analyst Laura Suter.

“The tally of outflows since the Brexit vote keeps ratcheting up, and is now within touching distance of £15bn – leaving quite a hole in UK fund managers’ portfolios,” she added.

All equity fund regions experienced outflows in September. Europe funds were behind the UK with £290m outflows, while Japan funds saw £254m outflows.

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“Bond funds benefited as investors looked for a port in the storm, with Mixed Asset funds also providing relief,” said Cummings.

Bond and mixed asset funds each recorded £2.2bn of inflows in the last quarters, as investors continued to move to diversify their portfolios.

Main image credit: Getty