Investors have withdrawn £7.9bn from UK focused equity funds in the Investment Association (IA) universe since the UK voted to leave the European Union.
Data from the Investment Association shows a net £142m was withdrawn from the UK equity fund sector in April, bringing the total pulled from the sector since the referendum to £7.9bn.
The £142m was less than the average monthly rate of withdrawls from UK equity funds over the past year, which was £361m.
The £7.9bn of withdrawals comprises £1.8bn from funds in the IA UK Equity Income sector and £5.8bn from the IA UK All Companies sector.
The remaining £300m is from other UK equity sectors.
Laura Suter, personal finance analyst at AJ Bell, said that while sentiment remains negative towards the UK since the decision to exit the European Union, investors are bullish on equities generally, with more than £1bn invested in equities in April.
Jonathan Davis, who runs Jonathan Davis Wealth Management in Hertford, said Brexit is not part of his investment thinking when choosing investments for clients.
The other sector to see significant outflows of late is IA Strategic Bond.
Since April 2017, investors have withdrawn £7.8bn from funds focused on this part of the market.
Nimesh Patel, an adviser at EA Financial Solutions in London, said he tends to favour strategic bond funds, particularly at a time when interest rates are rising.
He said this is because strategic bond funds have the flexibility to invest in many different parts of the bond market, and so can avoid interest rate risk in any one area of the asset class.
Region | Net retail sales in April 2018 | Average net retail sales for previous 12 months |
Global | £855 million | £428 million |
North America | £461 million | £116 million |
Asia | £228 million | £81 million |
Europe | £54 million | £314 million |
Japan | £40 million | £186 million |
UK | -£142 million | -£361 million |
The outflows from the strategic bond sector reached the highest level in March 2018 since the Brexit vote as investors feared the UK base rates would increase in May.
The IA Global sector was the most bought in April 2018, with a net £855m invested in the asset class. This is far ahead of the net average of £428m invested in the asset class over the past year.
The next most bought asset class was US equities, with £461m invested, compared with the twelve month average of £116m.
Despite the uncertainties that linger around the asset class, emerging markets proved popular with investors in April.
A net £267m was invested, compared with £40m withdrawn in April.
david.thorpe@ft.com
