UK investors continued to shun their home market in February, withdrawing £1.6bn from UK equity funds.
The scale of redemptions from UK equity funds have been increasing steadily over recent months, with £1.4bn withdrawn in January this year and £1.2bn the previous month, according to the Investment Association.
The UK’s popularity with equity investors has dropped in recent years, with some blaming a range of factors for companies choosing not to list on UK exchanges, including tight regulation, low valuations and a lack of enthusiasm from local investors to expose their portfolios to their home market.
There have been a number of high-profile decisions by companies to move their London listing abroad, or not list here in the first place, including Cambridge-based chip designer Arm which decided against a joint listing in London and New York in favour of a single listing on the latter.
North American funds in comparison saw stronger flows, with net investment of £557mn in February, an increase on the £361mn seen in January.
This reduced the overall outflows for equity funds, which saw a softening of outflows to £696mn from £916mn a month before.
Equity funds have seen net withdrawals for the past twelve months, according to the IA.
February investment
Inflows from UK investors slowed in February overall, with £409mn invested compared with £1.4bn in January.
Some £1.1bn was allocated to fixed income funds, a slight decrease from the £1.6bn inflow a month before.
Chris Cummings, chief executive of the Investment Association, said the “steady” inflows in February were driven by the inflows into bond funds.
“UK equities faced another difficult month, as investors failed to respond to the slightly improved outlook for the UK.”
In February, the Office for National Statistics reported that the economy did not grow in the fourth quarter of 2022, meaning the UK avoided a recession.
sally.hickey@ft.com
