Data from the platform published today (August 20) showed 24 per cent of the clients spoken to were holding fewer UK assets than normal as they fear the consequences of a sharp fall in the value of sterling as a result of the UK’s exit from the European Union.
Interactive Investor found concern about the outcome of the Brexit process has increased in recent months, with 37.5 per cent of investors concerned about Brexit in August, compared with 36 per cent in March.
The second area of concern to Interactive Investor clients was the trade dispute between the US and China, which was highlighted by 32 per cent of clients.
The platform polled 404 interactive investor website visitors between August 8 and 14, 2019.
It also found some 41 per cent of investors had an investment strategy in place and were sticking to it, despite the ongoing Brexit uncertainty.
This was down from 53 per cent in March, suggesting that investors are feeling less certain about the best course of action.
In addition, there has been a notable fall in investors deciding to filter out market ‘noise’ and take a long-term view – 23 per cent in August compared with 32 per cent in March.
Rebecca O’Keefe, head of investment at the platform, said: “Investing in non-UK assets has been a very rewarding strategy since the EU referendum, with investors benefiting from the weakness in sterling - and higher returns in global markets.
"Should the UK crash out of the EU without a deal, sterling may fall even further from its current low level, so it is no surprise that almost a quarter of investors polled said they are holding less in UK assets.”
Data from the Investment Association showed investors have withdrawn £12bn from UK equity funds between June 2016, when the referendum happened, and May 2019.
The MSCI UK All Cap Index lost 9 per cent over the past year, compared with a gain of just less than one per cent for the MSCI AllWorld Index in the same time period.
Simon Edelsten, who runs the £159m Artemis Global Select fund, has 6 per cent of the fund invested in the UK market right now, which is more than its MSCI AllWorld index weighting of about 5 per cent.
He said: “We have 6 per cent in the UK which is slightly more than the MSCI AllWorld index at 4.9 per cent at end July this year. But otherwise there are few UK listed stocks in our main areas of investment interest: scientific equipment, automation, renewable energy companies etc.
"There are UK businesses in these areas, but they are often subsidiaries of other companies (e.g. Thermo Fisher in scientific equipment has a major UK presence), or they are private businesses such as CMR surgical in Robotics.
"Valuations in the UK have become more attractive, probably due to Brexit fears, and this led us to buy Vodafone a few months ago as it seemed well backed by assets.”
Darius McDermott, managing director at Chelsea Financial Services, a competing platform to Interactive Investor, said: “Certainly I have noticed over the past decade a move away from UK funds from private investors.
"Back then, most UK clients just bought UK equity income funds and either took the income in retirement or invested the income for growth.
"But in recent years there has definitely been a move to have more global funds, it’s something that predates Brexit.”
Interactive Investor is a direct to consumer investment platform that also houses an adviser platform after acquiring the Alliance Trust Savings platform at the start of July 2019.
david.thorpe@ft.com
