Investors pump £108m into UK equity funds before election

Investors pump £108m into UK equity funds before election

Investors put a net £108m into UK open-ended equity funds in November, equating to £27m a week, according to latest data from the Investment Association.

The best selling equity market sector in the month prior to the general election was IA North America, which attracted net new inflows of £292m.

The best selling sector overall was IA Volatility managed, which attracted £411m. 

Outflows of £104m from Money Market funds on the other hand showed investors turning away from safe haven assets, while the worst selling sector during the month was IA Total Return, which had outflows of £656m.

This included £1.1bn which was removed from the Aberdeen Standard Investments Global Absolute Return Strategy, which was once the largest fund in the UK retail market and one of the first Total Return funds. 

Adrian Lowcock, head of personal investing at Willis Owen, said most of the capital that went into UK equity funds during the month was from institutional investors, while retail investors were more cautious. 

He said: “It makes sense really that institutional investors would be driving the inflows into the UK, I think a lot of those guys took a view very early on in the election campaign that the Conservatives would win the election and that this would be good for the market, and the rally that happened once the Conservative victory was confirmed proved this.

"Also, investors generally became more positive during that month as the US/China trade dispute appeared to be nearing a resolution.” 

Laura Suter, personal finance analyst at AJ Bell, said the "rare month of inflows" had followed pretty flat figures for October and meant investors were primed to benefit from the rebound that UK markets saw in December following the general election result.

But she added: "Despite the inflows in November, investors on the whole have pulled almost £3bn from UK funds in the 12 months to the end of November.

"Considering the FTSE 100 finished 2019 up more than 17 per cent and the FTSE 250 rose 29 per cent during the year, these investors may be regretting that move now, with the benefit of hindsight.”

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