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UK equity funds post net inflows for first time in 10 months

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UK equities flows are back in positive territory in November for the first time after 10 months of outflows, data from the Investment Association shows.

UK equity funds, which gathered £114m in November, had suffered £5.1bn outflows since January and £3.8bn since June, when the EU referendum took place.

Investment Association chief executive Chris Cummings says: “UK investors were tempted back into equity funds in November. We saw positive flows into UK equities for the first time in 2016, which helped November to record the second highest monthly inflow of the year.

“The long period of uncertainty global markets have faced through the US election cycle also came to end with Donald Trump’s unexpected win.”

UK equity funds account for 22 per cent of the industry’s total funds under management and 40 per cent of equity funds under management, notes Alastair Wainwright, fund market specialist at the IA, who welcomes the new data.

Overall, retail sales for equity funds in all regions was £583m in November, the first positive figure of 2016.

More than £9.3bn left equity funds since January, according to IA data. However, investors continue to withdraw money from fixed income funds.

In November £202m flew out from fixed income funds, compared to inflows of £359m in October, marking the first outflow since February last year. But in November 2015, outflows were more negative at £306m.

Meanwhile, investors picked global funds for the period as the region attracted £420m.

North American equity funds were the second best-selling with net retail sales of £244m, followed by the UK.

Europe and Asia continue to lag behind with outflows of £165m and £147m. This compares with outflows of £367m and £39m in October.

As the run to passives looks to continue in 2017, data for November confirms the trend.

Tracker funds attracted £1.2bn, marking the second highest monthly inflow on record. The highest was in June 2013 with sales of £1.9bn, the IA notes.

Wainwright says: “Tracker funds attracted significant flows, the second highest monthly inflow on record. Equity trackers took in the largest share of net retail flows, £911m.

“No single region stood out as UK, US, Japanese and Global tracker funds all experienced strong sales.”

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