Brexit uncertainty weighs as retail investors pull another £1.2bn from UK equity funds

Retail investors pulled another £1.2bn from UK equity funds in July as uncertainty over Brexit continues to impact the asset class

Retail investors pulled another £1.2bn from UK equity funds in July as uncertainty over Brexit continues to plight attitudes towards the asset class, while bond funds maintained their run of attracting the most investor capital.

The latest Investment Association (IA) data shows overall net retail sales experienced a fourth consecutive month of inflows, with £924m allocated to funds in July, boosted by fixed income funds, which saw £2.2bn of net inflows.

Fixed income was the highest selling asset class in July for the fifth month in a row with the IA’s £ Strategic Bond sector the best-selling for the month, attracting net retail inflows of £1.2bn.

The IA Global sector was the second best-selling with net retail sales of £424m, followed by Global Bonds, Mixed Investments 40-85% and Volatility Managed, which brought in net £406m, £399m and £259m each respectively.

By contrast, equity, money market and property funds all saw net retail outflows of £1.7bn, £87m and £158m, respectively.

Chief executive of the IA, Chris Cummings described the “appetite” for equities versus fixed income as “poles apart” in July “as savers looked to weather the ongoing political and economic uncertainty by diversifying their investments and seeking out safe haven assets.”

Cummings added that investors reacted to the ratcheting up of uncertainty in the UK, triggered by the change in political leadership.

He said that the bond market, however, continued its return to favour with £2.2bn in net retail sales in July in the fifth month of positive flows, helping lift the fund market to total net retail sales of £924m.

By region, Asia and Global funds were alone in attracting net retail sales, pulling in £154m and £146m respectively.

While no region fared as poorly as the UK, which saw net £1.2bn of outflows, Europe funds, Japan funds and North America funds experienced net redemptions of £430m, £205m and £90m respectively.

Elsewhere, tracker funds continue to expand their share of the market to 16.9%. Having already seen inflows of £5.7bn for the second quarter of this year, tracker funds made net retail sales of £1.7bn in July thereby taking total tracker fund AUM to £217bn.

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