The UK stock market is touted as cheap by many, but investors believe there is a reason for this, as it closed $ 445 million in August.
The UK All Companies sector saw outflows of £ 354.2m during the month, making it the least popular category according to the latest figures from the Investment Association. UK Equity Income Funds withdrew £ 177.2million, the 15th consecutive month of peer group redemptions, with UK Smaller Companies being the only bright spot, pulling in £ 86.7million.
Net retail inflows remained overall robust at £ 5.3bn, compared to £ 4.8bn in July. Global stocks remain in high demand, with the IA’s global sector topping the list for the third straight month at £ 838m.
“The UK equity sector remains a bête noire for investors, with a £ 445 million outflow in August,” said Laith Khalaf, head of investment research at AJ Bell. “Investors are instead lured into the bright lights of the global funds sector, where performance has long been strong, fueled by the uptrend in the US tech sector.”
August’s fund charts showed that investors are increasingly cautious in light of the fragile state of the economic recovery as the delta variant continues to spread around the world and logistical blockages persist.
The Mixed Investment 40-85% Shares sector – formerly known as Balanced Managed – was the third most popular as mixed investment funds attracted £ 636 million in fresh money. Cash funds inflowed £ 625 million, underscoring the caution, while volatility managed and targeted return funds – sectors targeting troubled markets – posted inflows of £ 403 million and £ 198 million, respectively.
Demand for responsible mutual funds remained resilient, with inflows of £ 1.3 billion in August, the seventh straight month of attracting over £ 1 billion.
IA CEO Chris Cummings said, “We saw significant net retail sales to funds throughout the summer of 2021. Investors invested £ 14.5 billion in funds between June and August as rising inflation combined with low interest rates continue to make funds attractive to savers. ‘
Investors withdraw £ 445m from UK equity funds