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Equities finish 2019 on high as property suffers record outflows

Equities riseEquities ended last year on a high after the general election result boosted UK investor confidence. Real estate funds, however, suffered the worst year on record for flows.

Investors poured a net £2 billion (€2.4 billion) of new money into equities in December – more than any other time in the last two years. Over half of this cash was designated to UK-focused funds, while the rest was directed towards global and north American funds.

On the day of the election result - which saw the Conservative Party win a landslide victory - inflows almost tripled to £153 million, according to the latest flow data from funds transaction network Calastone. For the whole year, UK equities saw net inflows of £1.5 billion.

It was a different story for real estate. Although outflows slowed following the election result, the asset class finished the month in the red with a total of £314 million in overall redemptions – the second highest figure on record – bringing total outflows for the year to £2.2 billion.

Edward Glyn, head of global markets at Calastone said: “December proved just how powerful the influence of politics is over investor activity. Hints of progress on US-China trade relations combined with a landslide victory for the Conservative Party generated a huge turnaround in appetite for equity funds.”

Bonds also ended the year on a positive note, with over £500 million in inflows throughout December, bringing the total for 2019 to nearly £5 billion.

According to Glyn, however, with Brexit still unresolved, the UK’s future is not set in stone.

“We are just at the end of the beginning of the Brexit journey. Which of the wide range of available paths the government chooses to take for its future relations with the EU will determine whether December was just a flurry of relief-driven excitement or the beginning of a sustainable trend back into favour for UK equities,” he said.

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