Property holds up as UK funds see broad outflows linked to Brexit

Some £38 billion (€47.8 billion) flowed out from UK mutual funds in the 12 months to May 31 in what is mostly seen as a reaction to the possible Brexit.

January saw the worst outflows with almost £16 billion leaving funds, according to analysis by Thomson Reuters Lipper.

Lipper carried out analysis of net fund flows among Investment Association (IA) fund classifications to assess the “impact of Britain’s impending EU membership referendum on fund flows in the UK”.

The largest IA sector (UK All Companies), with some 12% of all IA assets, has suffered a yearly net outflow of £9.2 billion. In the last 12 months it has experienced only a single positive month of flows (July 2015).

The IA Sterling Strategic Bond sector has been worst hit as a proportion of its overall size in the UK market. With 4% of total assets overall, it has suffered nearly £12 billion of net outflows to the end of May 2016, without a single monthly net inflow for the year.

Mixed asset funds also saw outflows.

However, four sectors saw more than £1 billion of net inflows in the 12 months to the end of May: Property, Global Equity Income, Global Bonds, and Targeted Absolute Return.

“The latter sector has been the standout success story for the UK market for the last 12 months,” Lipper said. “It has collected nearly £10 billion of net inflows. This is despite the corresponding average fund return of the sector being a negative 0.6% over the same period.”

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