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UK retail investors pulled £444m from UK-focused equities funds in October, marking the seventh month over the past year that the sector has seen more net outflows than any other.
Figures from the Investment Association, the trade body for the UK’s asset management sector, showed the average monthly net withdrawal from UK equities over the last 12 months was £198m.
Only five months out of the past 12 saw other asset classes hit by the most redemptions — despite a 9.77% rise in the FTSE All Share over the same period.
IA chief executive Chris Cummings said: “UK investors continue to sell out of UK equities as both the UK All Companies and UK Equity Income sectors experienced outflows in October for the sixth month in a row.”
UK Equity Income was the worst-selling sector in October with a net retail outflow of £272m, Cummings said. UK All Companies experienced a net retail outflow of £224m.
Overall, investment assets hit a peak, as monthly net retail sales were in excess of £5bn. At the end of October, IA members were responsible £1.19tn of UK investor savings and investments.
Laith Khalaf, senior analyst at funds platform Hargreaves Lansdown, said while investors were ploughing record amounts into investment funds, more than £2bn had been withdrawn from UK equity funds so far this year.
Khalaf said: “The root of this is no doubt the current cocktail of political and economic uncertainty enveloping the UK, combined with a stock market which is perceived to be propped up by a weak currency and loose monetary policy.”
He added that UK bonds had attracted large amounts of new money, despite offering relatively poor value, “but in times of uncertainty money does flow towards fixed income securities, seemingly at any price”.
Fixed income was the best-selling asset class over the month, with net retail sales of more than £2bn.
Khalaf was gloomy about the outlook for UK equities: “Looking forward into 2018, the ongoing Brexit negotiations clearly add a large dose of randomness into the prospects for asset class returns. In such a scenario it makes particular sense to maintain a diversified portfolio, though that still means holding some UK equities.”
The best-selling equity funds over the month were those focused on Japanese stocks, which saw £234m in inflows.
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