UK equity “exodus” continues

UK equitiesUK investors continued to sell out of UK equities, industry data for October shows.

Both the UK All Companies and UK Equity Income sectors experienced outflows for the sixth month in a row, The Investment Association said.

UK Equity Income was the worst selling sector in October with a net retail outflow of £272 million (€308 million).

UK All Companies experienced a net retail outflow of £224 million.

Fixed income saw positive flows of £2 billion ((overwhelmingly to Sterling Strategic Bonds) and the overall retail fund flow figure for the UK in October was £5 billion.

Chris Cummings, chief executive of the IA described the £5 billion net flows as the continuation of a “record breaking run”, but Laith Khalaf, senior analyst at Hargreaves Lansdown, focused on the “exodus from UK equities”with over £2 billion withdrawn from these funds so far this year.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.

He added: “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.”

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