The scale of investor disillusionment with UK equities can be seen in the withdrawals of £900m per month on average in the three months to the end of August.
Data from the Investment Association shows that investors withdrew £2.7bn in the three months to the end of August, an average of £900m a month.
Laith Khalaf, investment analyst at AJ Bell said UK equities have become a “bete noir” for investors.
None of the top ten most bought funds among AJ Bell clients in that period were UK equity funds.
Colin Morton, UK equity fund manager at Franklin Templeton believes the best value in the UK market is among the stocks that have sold off the most, with many of those being companies which investors have shunned as they believe the business models have been permanently damaged by societal changes resulting from the pandemic.
These include property companies, and companies in the leisure and retail sectors.
Mr Morton believes the market is pricing assets as if it is “certain” that some of the consumer and employee habits adopted during lockdown will continue in a world where there are no restrictions.
He believes there is no such certainty and that if people do revert to previous habits, then some of the UK-listed companies that have suffered severe share price falls will bounce back.
david.thorpe@ft.com
