Equity funds suffer record Q3 redemptions

Equity fund redemptionsMoney flowed out of equity funds at a record level throughout the third quarter this year, according to data from the UK industry trade body the Investment Association (IA).

During September alone investors pulled out £1.7 billion (€1.97 billion) from equity funds as global uncertainty reigned. It was the fourth consecutive month of negative flows for the asset class.

Equity fund redemptions for the quarter as a whole reached £4.6 billion – the largest net retail outflows on record, according to the IA.

UK equities were hit particularly hard as investors seeking to de-risk withdrew £2.3 billion – also a record figure for the quarter.

IA chief executive Chris Cummings said: “Global uncertainty cast a long shadow over stocks and shares in the last quarter.”

“Bond funds benefited as investors looked for a port in the storm, with mixed asset funds also providing relief,” he said.

Bond and mixed asset funds each experienced inflows of £2.2 billion over the period.

According to a separate report published on Wednesday by fund transaction network Calastone, October saw respite for equities.

Optimism prompted by a Brexit agreement announced by prime minister Boris Johnson boosted equities, resulting in £97 million of inflows – their first inflows since June.

Edward Glyn, head of global markets at Calastone, said: “Despite a slight improvement in October, it’s too soon to call a turning point in investor appetite to commit capital to riskier assets. Uncertainties abound and that is likely to weigh on sentiment in the months ahead.”

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