Further UK Funds Outflows Experienced As Uncertainty Over Brexit Continues

Last August, funds that are focused in the United Kingdom continued to observe outflows as the investor confidence continued to be affected by the uncertainty over Brexit. So far, it took the post-referendum total to £10.2bn.

According to the latest figures from the Investment Association, the net retail sales outflows were estimated at £217m in August as compared to the inflows that amounted to £4.6bn during the previous year,

Equity funds in the United Kingdom observed an outflow of £429m while European equities also observed a decline of £303m, while North America faired better with inflows amounting of £417m.

Chris Cummings, the chief executive of the Investment Association, stated: “The uncertainty in the Brexit negotiations continued to be a key factor denting investor confidence in August, with funds experiencing the first retail outflows since the EU referendum result.”

He added: “UK equities remain firmly out of favour, with European equities also experiencing another month of outflows. As the March 2019 Brexit deadline looms, investors are seeking to diversify and manage their risk with global and mixed asset funds attracting strong inflows, as did Volatility Managed funds.”

Global funds were the best performing sector with net retail sales amounting to £417m last August. It was followed by North America, Japan and Asia.

Laura Suter, a personal finance analyst of AJ Bell, stated: “Investors continued to pull money from UK-focused funds in August, with another £423m being withdrawn from the sector.”

She added: “This takes the amount of money pulled from UK equity fund managers to a whopping £10.2bn since the Brexit vote 16 months ago.”

She continued: “Investors’ fondness for spreading their risk around the globe has continued, with global equity funds netting another £417m of inflows in August, while investors also put £66m into North America funds and £47m into emerging market funds.”

The finance analyst further commented: “However, it seems worries about the Bank of England raising interest rates has led investors to get jittery about bonds. While UK bonds have seen almost £13bn flow into them in the months since the referendum, August marked net outflows of £259m from UK bond funds.

She continued: “Just how nervous investors are feeling is reflected in overall inflows in the month. August saw investors pull £217m from funds, compared to more than £4.5bn of inflows in the same month last year – a reduction of 105 per cent.

She also disclosed: “Across the industry the amount UK investors actually hold in funds remained pretty flat compared to the month earlier, as rising markets mean that growth in assets compensated for much of those outflows.”