Investors have withdrawn £15bn from UK equity funds since the day the UK voted to exit the EU, with four giant funds accounting for the bulk of the fall.
Data from Morningstar showed the Woodford Equity Income fund run by Neil Woodford and the three Invesco funds run by Mark Barnett had lost €10.5bn (£9.4bn) since 2016 due to assets being withdrawn and poor performance.
Morningstar said the data showed that, excluding those four funds, the picture was more mixed with "no exodus" from UK funds.
Both Mr Woodford and Mr Barnett are of the opinion the market’s view of Brexit’s impact is wrong and have been buying UK domestically focused shares in areas such as house building and property, which have fallen furthest.
Data from FE Analytics showed that since the day of the Brexit referendum in June 2016 the IA UK All Companies sector has returned 14 per cent.
Meanwhile Mr Woodford’s fund, which was once £10.1bn in size, has shrunk to £4.7bn and has lost 7.5 per cent since the day of the Brexit vote.
In his latest update to shareholders, Mr Woodford said he remained convinced that Brexit will no impact on the economy in 2019.
Mr Barnett's largest fund, the £8bn Invesco Perpetual High Income fund, which was formerly run by Mr Woodford and is also in the IA UK All Companies sector, has lost 0.9 per cent since the Brexit vote while the Income fund has lost 0.8 per cent.
Dan Kemp, chief investment officer at Morningstar, said that as investor sentiment has shifted sharply against UK assets, he had become more positive.
He said: "Brexit is difficult to analyse because of the indirect and tenuous connections it has on investment fundamentals. We believe that when investors depart from long-term, fundamentally sound investment analysis, they can drift dangerously into speculation.
"The first thing to acknowledge about the fundamentals is that the UK economy is not the UK equity market. We do not need to predict the UK economy to know what might happen to UK stocks. The UK is unloved, reasonably cheap, and fundamentally healthy."
The Morningstar analysis comes in light of the market reacting to Theresa May winning sufficient support from her party to remain as Prime Minister.
Helal Miah, investment research analyst at the Share Centre said: "Overall this episode had little impact on the stock market and sterling which is still trading near 18 month lows.
"The focus is now on the bigger picture and markets may take a little encouragement that the cataclysmic 'no-deal' scenario is looking a little more distant.
"For the time being, uncertainty will persist, businesses will still hold off making investment decisions and market’s worries will not be helped by the wider global economic conditions and political rhetoric.
"These provide opportunities for traders who thrive off volatility, but investors would understandably hold off putting more money into the markets. However we believe those already invested in the market, staying put may well be the best course of action."
Joshua Mahony, senior analyst at IG group said: "The pound has managed to regain ground overnight, with Theresa May’s victory in yesterday’s vote helping raise hopes of a more stable political landscape."
This article has been amended post publication to reflect that Woodford Equity Income and the three Invesco funds had lost £9.4bn, not £21bn as previously stated, after Morningstar corrected its data.
david.thorpe@ft.com
