UK equity funds suffered their second-worst month on record in September, as long queues at petrol stations and concerns over rising inflation prompted jittery investors to head for the exit.
Data from Calastone, which tracks money entering and leaving funds in the UK from financial advisers, fund supermarkets, and wealth managers, shows investors withdrew £567m from funds that invest in UK assets — the worst month for outflows since June 2020 when profit-taking savers yanked £673m following central bank stimulus and an uptick in global markets.
“The petrol panic, soaring inflation, empty supermarket shelves, fractured supply chains, crippling staff shortages and turmoil in gas and electricity markets are all taking their toll on investor confidence,” said Edward Glyn, head of global markets at Calastone.
“With so much going wrong so quickly, investors have voted with their feet and dumped UK assets. Investors know that other parts of the world are also experiencing some of these difficulties, but inflows to funds focused on other regions emphasise that they realise the problems are more widespread and more acute in the UK than elsewhere.”
Active equity funds were the worst hit during September, accounting for 98% of the overall outflows from UK-focused funds, according to Calastone.
Among last month’s winners were global equity funds, which posted net inflows of £805m. Meanwhile, funds focused on North America gathered £230m.
European equity funds added £37m while emerging market funds gathered a record £407m.
The bearish investor outlook for UK assets dragged overall inflows registered by all equity funds during the month to its lowest level since January, coming in at £450m.
Funds focused on environmental, social and governance issues posted the biggest gains with £1.1bn, marking the second-highest monthly inflow on record. The latest haul means that £3 in every £5 investors have added to equities so far this year have flowed into ESG funds.
“It has been an unusually hapless month for the UK. We have all strapped in for a bumpy few months of news ahead, so we should also brace for further volatility in fund flows for UK equities,” said Glyn.
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