Investors fled equities to the tune of £2bn in June as they looked to cash in the profits made off the back of the stock market rally amid fears of a second coronavirus wave.
After two months of positive inflows, UK-based funds saw £1.3bn withdrawn in June 2020, with equity funds taking the brunt of redemptions as investors pulled £2.1bn from the stock market.
The Morningstar figures, published this week (July 21), showed UK equities were the worst hit with £1.3bn of outflows alone.
Experts say the data showed investors were redeeming the profits made from an impressive stock market run since the lows of March and April and withdrawing their cash due to fears a second coronavirus wave and heightened US-China tensions could see another market crash.
Since March 16, the UK’s blue chip index is up 23 per cent while the S&P 500 has seen a 32 per cent rise.
Investment manager at GDIM, Tom Sparke, said: “Investors are taking profits. Having seen a rally from the lows of March, many investors will be back in the black and taking the withdrawals they put off doing at the markets’ lows.”
Jason Hollands, managing director at Tilney, said the Morningstar figures suggested “some profit taking” as the markets had delivered “supernormal returns” for those who had bought on the dip.
The Morningstar data showed investors were still keen on fixed income funds however, with £1.2bn piled into bond funds in June, following on from £1.9bn of net inflows into the asset class in May.
Ben Yearsley, investment consultant at Fairview Investing, said investors were sensitive to the fact there was “more muted news about the economic recovery", which was making them "a bit more cautious”.
He added: “The virus hasn’t gone away and the infection rate has picked up in the US so some investors are more cautious.”
Adrian Lowcock, head of personal investing at Willis Owen, agreed. He said investors were likely being more cautious now as the stock market was looking “detached from the economic reality” and there were fears of a second lockdown.
Investors continued to dodge other asset classes however, pulling £900m from alternative funds and £23m from property portfolios.
In terms of fund houses, Baillie Gifford has seen a steady stream of inflows thanks to the strong performance of its growth-orientated funds and investors pumped £690m into its portfolios in June.
Vanguard also continued to see strong inflows, with £270m placed in Vanguard funds, while investors maintained their stance of dodging Invesco as a further £1.2bn was pulled from the troubled fund house.
imogen.tew@ft.com
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