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UK outflows continue in August as uncertainty remains

Bank_of_EnglandThe flight from UK-domiciled assets continued in August as uncertainty surrounding the country’s future continued.

The latest data from Morningstar showed investors pulled out a total of £1.7 billion (€1.9 billion) during the month, excluding money market funds which saw inflows of nearly half-a-billion pounds.

According to Morningstar, investors were looking outside of the UK to invest and – due to fluctuations in the pound - hedged share classes have been more popular recently.

Bhavik Parekh, the firm’s associate analyst, said: “Investor sentiment remains low, with no clarity on the outcome of Brexit and wider concerns of a global slowdown.”

August saw a continuation of the broad trend flows of the past five months, with net inflows into fixed income, money market and “allocation” funds, and net outflows from equity, alternatives and property funds, the report found.

Fixed income saw inflows of £1.2 billion, slightly offsetting the outflows from other asset classes.

Investors have not been put off fixed income despite the proliferation of bonds with negative yields and the same trend was seen in Europe and the US, according to Morningstar.

“This demonstrates that it's not just UK investors who have been favouring lower-risk assets. The high demand for fixed-income investments in 2019 is one reason bond yields across the world have been pushed into negative territory on such a large scale,” said Parekh.

Fund transaction network Calastone recently also found evidence of outflows from the UK industry.

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