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UK equity funds still suffer Brexit effect

UK equity fundsUK equity funds experienced outflows in May, lengthening a period of unpopularity for the asset class that begain in January 2016.

The £1.2 billion outflow from authorised UK funds investing in the country’s shares was linked to Brexit.

Chris Cummings, chief executive of the Investment Association, which published the data, said: “In the context of ongoing Brexit uncertainty, outflows from UK equity funds reached £1.2 billion in May. As the clock ticks towards the UK leaving the EU, we need to see a gear change ahead of the next European Council Summit in October and significant progress being made towards a deal that will protect the wider European economy.”

Alastair Wainwright, fund market specialist at the IA, said: “However, UK equities are not necessarily reflective of the UK economy, given the high number of firms with international revenue bases listed in London.”

IA figures also showed outflows from the sterling corporate bond and high yield bond sectors in May, but inflows into the sterling strategic bond sector increased. Within the strategic bond sector there were higher flows into funds with a global investment strategy, and lower inflows into funds with high UK exposure.

Targeted absolute return was the best-selling sector with £516 million of net inflows.

Net retail sales were positive in May with an additional £1.9 billion invested into UK authorised funds, and funds under management totalling £1.2 trillion.

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