Retail investors withdrew £444 million from UK equity funds in October according to the latest data released by the Investment Association this morning. This is the sixth consecutive month of outflows from UK equities.
It’s been a record breaking year for fund sales overall however, with fixed income and missed asset sectors doing particularly well.
Laith Khalaf, Senior Analyst, Hargreaves Lansdown:
"Investors are ploughing record amounts into investment funds, but at the same time there is an exodus from UK equities, with over £2 billion withdrawn from these funds so far this year. The root of this is no doubt the current cocktail of political and economic uncertainty enveloping the UK, combined with a stock market which is perceived to be propped up by a weak currency and loose monetary policy.
The main beneficiary of the malaise towards UK equities has been the fixed income sectors, which have continued to attract large sums of money despite the prospect of rising interest rates presenting a headwind for bond funds. There looks to be little value in the bond world at the moment, but in times of uncertainty money does flow towards fixed income securities, seemingly at any price.
Looking forward into 2018, the ongoing Brexit negotiations clearly add a large dose of randomness into the prospects for asset class returns. In such a scenario it makes particular sense to maintain a diversified portfolio, though that still means holding some UK equities. Investors who shun the UK are not only losing diversification, they are missing out on exposure to some of the best fund managers around."