Nervous UK investors are pulling cash from equity funds in droves as soaring inflation continues to batter global stock markets, new data has revealed.
British investors pulled £416m from equity funds in July, taking the total figure to £2.35bn in 2022 so far, according to fund data firm Calastone.
The data underscores the sharp turnaround in investor sentiment this year after £11.08bn was ploughed into equities in the same period in 2021. The outflows mark the worst January to July period for equity funds since 2016 when markets were rocked by the tumult of Brexit and a US election.
Analysts at Calastone said UK investors had been notably more averse to equity markets than international comparators as political uncertainty compounded inflationary fears.
“The perception that the UK faces uniquely difficult challenges is clear in investor behaviour,” said Edward Glyn, head of global markets.
“Even after adjusting for the very large value of assets under management in UK-focused funds, the outflows are still exceptionally large.
“Investors want to see inflation come down, growth improve, trade disputes settled, and political gridlock broken before they are going to become enthusiastic buyers of UK assets again.”
It came as separate Investment Association data showed that investors globally pulled £4.5bn out of funds in June – the highest monthly outflow of the year so far and the second highest on record.
Equity funds weathered the heaviest outflows of £2.3bn, but responsible investment funds bucked the trend to take £71m.