UK and Europe out of favour as Brexit turmoil spooks investors

Laura Suter
4 April 2019

•         Investors have sold £11.5bn of UK funds since Brexit vote
•         UK All Companies funds see almost 2 years of outflows
•         Absolute Return funds saw £1bn of outflows in the first two months of 2019

Laura Suter, personal finance analyst at investment platform AJ Bell, comments on the latest Investment Association figures for fund sales in February:

“Investors have now sold £11.5bn of UK equity funds since the Brexit vote, and this month is no different with £236m of outflows from UK stock market funds. The UK All Companies sector has seen consistent outflows for almost two years now, with £6.1bn of investor money whipped out.  

“The UK is not alone, with Europe also being out of favour with investors nervous about the impact of Brexit and slowing European growth. Another £453m of European equity funds were sold in February, and the past year alone has seen £2.7bn worth of funds sold.

“Targeted Absolute Return funds continue to be another black spot for investors, as they notched up an eighth consecutive month of outflows, with £3.8bn pulled from the funds during that time. 

“Instead investors are seeking the relative shelter of global equity funds, deferring the decision on asset allocation to fund managers. Another £513m flowed into global equity funds in February, with the sector seeing almost £4bn of inflows over the past year. 

“The scale of investor nervousness about markets is highlighted when you compare net retail sales for last February, of £1bn, with the fact that a net £156m was withdrawn from funds this February. However, February’s outflows were lower than January’s, which should give fund managers hoping for an ISA season boost some solace. 

During that time though the total assets run by fund managers has stayed flat, as the rally in markets has boosted values.”

Laura Suter
Personal Finance Analyst
Laura Suter is personal finance analyst at AJ Bell. She is a multi-award winning former financial journalist, having specialised in investments. Laura joined AJ Bell from the Daily Telegraph, where she was investment editor. She has previously worked for adviser publications Money Marketing and Money Management, and has worked for an investment publication in New York. She has a degree in Journalism Studies from University of Sheffield.
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