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Fund sales boom but investors continue to shun UK

Investors ploughed £3.5 billion into funds in July but continued to pull their money from those focused on UK shares.

 
Fund sales boom but investors continue to shun UK
 

Brexit woes are weighing on investors’ minds as they continue to abandon UK equity funds and move into overseas opportunities.

The swing back into equities kept up its staggering pace in July, according to figures from the Investment Association (IA). Net retail sales in July topped £3.5 billion, and so far this year investors have put £23.1 billion into equities, already far outstripping the £16.9 billion invested in 2015 and the £6.8 billion invested in 2016.  

The push back into equities reverses the £419 million of outflows seen last July in the wake of the Brexit vote. However, investors are still cautious on the outlook for the UK-focused funds, taking £290 million out in July.

Global funds continue to be the top spot for investor cash, racking up £607 million of net sales in July, up from £466 million the previous month. The sterling corporate bond sector took the title of second best-selling sector with £432 million of net sales, followed by Europe ex-UK, Targeted Absolute Return and Volatility Managed.

The worst-selling sector in July was UK All Companies, which saw outflows of £214 million.

All asset classes, except Money Markets, saw an uptick in inflows in July, with Fixed Income attracting the most interest with £1 billion of net retail sales.

Mixed Asset was the second best-selling with net retail sales of £958 million, equities came in third at £924 million net sales and property saw fund inflows of £32 million. Money Market funds reported outflows of £124 million in July.

Mark Dampier (pictured), head of investment research at Hargreaves Lansdown, said it was unsurprising investors were abandoning UK equities ‘given the relentless negative press coverage on Brexit’.

He said it mirrored the reaction to Europe in 2012 when investors fretted over Grexit and the size of the Greek debt pile.

‘Yet back then it was a great buying opportunity, but only in the last few months has Europe become popular again,’ he said.

‘Too many investors write-off their home market, perhaps because they are so close to it. Time and time again I meet UK fund managers who see great UK companies across the cap spectrum.’

Dampier added that it as ‘important to diversify’ but investors should ‘look more closely at the UK’.

‘Unfashionable regions are always worth a closer look at and for the majority of investors, the UK should form the core of their portfolios.’

3 comments so far. Why not have your say?

Micawber

Sep 13, 2017 at 11:17

Interesting comment by Dampier! I must say that in the most read UK newspapers I have seen relentless *positive* press coverage on Brexit......

From the investor's point of view the disruptions of Brexit offer some opportunities as well as things better avoided, but overall the reality is likely to be worse than the Daily Telegraph, Mail, Sun and Express have had us believe, and as about 56% of the UK market is owned by overseas investors, it is their judgment that is more likely to drive prices.

Then there's the strong probability that our embattled and self-immolatory government will be followed by a hard left one, with all that that implies for investors.

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North Star

Sep 13, 2017 at 17:20

In my opinion having the majority of your investments in one country is bad advice. A good mix of global investments is required in any portfolio and Fundsmith probably shows the way to do it with 80% in international equities.

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Hugh M

Sep 14, 2017 at 07:09

‘Too many investors write-off their home market, perhaps because they are so close to it.

FTSE ALL WORLD EMERGING ASIA PACIFIC YTD = +18.2

FTSE ALL WORLD EX UK YTD = +9.1

FTSE EUROPE EX UK YTD = +17.0

FTSE WORLD - TECHNOLOGY HARDWARE & QUIPMENT YTD = +18.5

FTSE ALL SHARE YTD = +7.5

This is more likely the reason methinks.

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