Billions withdrawn from UK equity funds since Brexit

Billions withdrawn from UK equity funds since Brexit

Investors have withdrawn £10bn from UK equity funds since the Brexit vote in June 2016, according to latest figures.

Data released this morning (4 October) by the Investment Association, showed investor outflows from all equity sectors amounted to £308m in August, while the IA Global sector had inflows of £417m during the month.

UK-focused funds saw another £423m being withdrawn from the sector. 

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The cash taken out of equities appeared to have been deployed into mixed asset and absolute return funds during the month.

In total, £539m of net inflows went into the mixed investment sectors, while £36m went into funds categorised as "other" which includes absolute return funds.

Chris Cummings, chief executive of the Investment Association, said: "The uncertainty in the Brexit negotiations continued to be a key factor denting investor confidence in August, with funds experiencing the first retail outflows since the EU referendum result.

"UK equities remain firmly out of favour, with European equities also experiencing another month of outflows.

"As the March 2019 Brexit deadline looms, investors are seeking to diversify and manage their risk with global and mixed asset funds attracting strong inflows, as did volatility managed funds."

Laura Suter, personal finance analyst at investment platform AJ Bell, said: "Investors continued to pull money from UK-focused funds in August, with another £423m being withdrawn from the sector.

"This takes the amount of money pulled from UK equity fund managers to a whopping £10.2bn since the Brexit vote 16 months ago.

"Across the industry the amount UK investors actually hold in funds remained pretty flat compared to the month earlier, as rising markets mean that growth in assets compensated for much of those outflows."

But Jason Hollands, managing director for business development and communications at wealth manager Tilney, said it was not all about Brexit.

He said: "The ongoing uncertainties around the Brexit process have undoubtedly been a factor dogging investor sentiment but let’s not also forget the wider backdrop of the escalating trade war between the US and China, turmoil across the emerging markets, and the ten year anniversary of the collapse of Lehman providing a platform for bearish headlines."