UK equity funds “leaking assets”

UK equitiesLarge UK equity fund outflows in January have prompted fears of unreasonable investor “antipathy” to the UK.

Investment Association data for January showed UK equity funds had outflows of £339 million (€380 million), the highest figure since June 2017.

Laith Khalaf, senior analyst, Hargreaves Lansdown, said: “UK funds continue to leak assets, while money is still pouring into global equities and fixed income.

“The antipathy towards the UK is now so long in the tooth one has to question whether sentiment is truly reflecting prospects for the UK stock market compared to its global peers.”

He warned that investors thinking of ditching their UK holdings should ensure they were not following the herd but have considered reasons for doing so.

Fixed interest and global equity funds continued to attract investors in January with fixed income leading the way with a £1.6 billion net retail inflow, while global equity had sales of £675 million, making it the best-selling equity sector in January.

Alastair Wainwright, fund market specialist of the Investment Association, said: “Flows into fixed income products may seem at odds with expected rate rises in the UK, however, sterling strategic bond funds are able to invest globally and hedge currency exposure, therefore, they are not necessarily taking on UK interest rate risk.”

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