UK Investors Withdraw £858 Million From Equity Funds

UK investors withdrew a net £858 million from equity funds in September, rotating more than £1 billion into bonds and cash. Data from the Calastone Fund Flow Index shows that UK-focused equity funds suffered the steepest losses with £708 million in outflows, extending a long-term downward trend. While global and emerging market funds attracted inflows, North American and Asian equity funds also saw significant withdrawals.

Fixed income funds gained £655 million, driven largely by high-yield strategies. Money market funds experienced their strongest monthly inflows since November, bringing in £417 million. This shift indicates a preference for lower-risk assets as yields rise.

Edward Glyn, head of global markets at Calastone, attributed the rotation to investor nervousness over high share prices, inflation, and geopolitical instability. He also noted that speculation regarding the upcoming Budget contributed to the trend, suggesting that investors are demanding more compensation for taking on equity risk.