UK investors pour £1.2bn into fund market during June
UK investors poured £1.2bn into funds during June, after a drought of investment from the retail space, data from the Investment Association has revealed.
Despite pulling over £24bn from funds throughout 2023, the first half of 2024 was a rare gem of success, with £1.7bn being added to funds over the six months.
So where is the money going? Index funds.
Inflows to index trackers totalled £15.1bn during the first half of the year, almost nine times the total money into funds.
This has already exceeded the £13.8bn the sector received during the entirety of 2023, with the money going overwhelmingly to equity index trackers.
In June, investors placed a net £1.2bn into equities, pushing up the first half’s total inflows to £424m, as data pointed towards improved investor confidence with central banks beginning to cut rates and inflation falling into place at target.
European, excluding UK, funds were particularly popular, with the funds receiving a record monthly inflow of £868m in June, following the European Central Bank’s interest rate cut.
Investors are also slowly moving from the strong performance of the US market, with global funds once again being the most popular in the second quarter, gaining £2.7bn.
Unfortunately, UK funds continues their poor streak of flow performance, being the only geography to register outflows for yet another quarter, thanks in part to record high redemptions in May.
Other areas suffering included fixed income, where outflows totalled £1.2bn in June, and responsible investment funds, with £302m pulled.
Miranda Seath, director of market insight and fund sectors at the Investment Association, said: “June has seen a return to inflow as investors opted to allocate capital back into equities. Investor confidence has been building throughout Q2 2024 as inflation has calmed and, in the UK, we have seen the first base rate cut from the Bank of England since March 2020. This decision could help to improve confidence and flows as we head into the second half of 2024.
“However, recent movements on the global stage on the back of poorer than anticipated US employment data have highlighted the complexities of the macroeconomic environment. Whilst the health of the US economy has implications for all major markets, it’s critical that investors remain focused on long-term goals rather than short-term market fluctuations.
“Investors thrive on greater certainty and in the UK, investor sentiment should be further improved by the new Government’s commitment to driving growth and maintaining fiscal responsibility. Following a prolonged period of outflow, we are beginning to see conditions that could give a boost to UK equities as we move into the autumn.”