Low UK fund investment “nothing to do with summer holidays”

Great Britain mapUK investment funds saw less than one-third of their average monthly inflows in August, with “skittishness” about Brexit blamed rather than a summer lull.

At £640 million (€704 million), fund flows were at a near three-year low, said Calastone, a fund transaction network that calculated the figure.

UK equity funds made up three-fifths of total fund outflows and UK real estate saw their second-largest outflows on record. Overall equity funds saw £525 million of redemptions and real estate had £334 million leave the sector.

Total trading volume was well above the average and so Calastone said the low inflows were not related to the summer holidays.

Fixed income funds saw inflows, but they were much lower than for the rest of the year, with tumbling bond yields blamed for reducing the attraction of bonds as a safe haven.

Meanwhile, fund flows offshore continued.

Calastone Fund Flow Index data shows that the last time fund flows were rocked like this in the recent past was in December 2018, when global trade tensions hit stock market.

Edward Glyn, Calastone’s head of markets, said: “UK political risk now combines with economic risk, so almost no matter how cheap UK asset valuations become relative to peers elsewhere, there is little appetite to buy them.”

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