Investors pull another £2bn out of UK stock funds

Morningstar said on Monday that investors withdrew another £2.26 billion out of UK equity funds in August as uncertainty over Brexit and a second wave of Covid-19 weighed on sentiment. 

Sustainable funds, however, enjoyed net inflows of £1.5 billion in August. 

And fixed income funds attracted £872 million of net new money.

“In March and April, opportunistic investors looked to take advantage of heavily subdued equity valuations, but since then the UK equity market has continued to underperform other equity markets, and investor sentiment has turned sour,” said Morningstar analyst Bhavik Parekh.

Morningstar said UK equity funds as a whole have been out of favour for four consecutive months.

Outflows from two State Street tracker funds in particular weighed on the sector in August.

Blackrock attracted the most assets in August, with total inflows of around £1.6 billion.

In second position was Schroders, with £588 million in new subscriptions.

In third position was Edinburgh-based Baillie Gifford.

“Some of its funds have been among the most popular this year as the typically growth-orientated strategies have achieved high returns,” said Parekh.

“Highly weighted holdings such as Tesla, Shopify, and Spotify, which have performed very strongly in 2020, led a number of funds to outperform their respective benchmarks by 20% to 50% in the year so far.”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.