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Vaccine news sparks massive equity fund inflows

Graph up_1News of developments on the Covid-19 vaccine front led to a boost in investor confidence and a surge in equity fund inflows in November.

Data from funds processing network Calastone shows the second highest ever inflows for equity funds on their records - £2.3 billion (€2.51 billion) – which was put down to vaccine optimism.

Active equity funds also enjoyed their best month in five years, helped by record inflows, as did ESG equity funds which saw more inflows in November than in the five years prior to January 2020.

The only equity funds to suffer outflows were in the real estate sector due to the pent-up demand to sell by investors who had their funds tied up during the RE fund suspensions in late 2019 and early 2020, according to the report.

Calastone’s daily trading data shows just how closely flows tracked the development of the vaccines. In the five days prior to the announcement of the Pfizer vaccine, equity funds saw outflows of £389 million. In the five days after, there were inflows of £1.4 billion.

The patterns were similar for the announcement of the two other vaccines from Moderna and Oxford/Astrazeneca which saw respective inflows of £897 million and £429 million.

Edward Glyn, Calastone’s head of global markets, said: “The long-awaited vaccine news could scarcely have been any better. Despite languishing in renewed lockdown confinement, investors went off to the races to celebrate.”

A big switch from safe-havens to riskier assets, and to active equity funds specifically, is all part of the vaccine-related excitement, said Glyn. “Anchored in monthly savings plans, index-tracking fund flows tend to be steady and positive, but active funds benefit much more when there is a big positive swing in sentiment,” he added.

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