Investors abandon UK and European funds in favour of global options.
Investors poured £840 million net into funds in June, with global funds the most popular. Latest data from trade body the Investment Association reveals UK investors now have £1.2 trillion invested in funds.
While investors put an impressive amount of extra cash into funds in the month, sales were actually at their lowest level for 18 months, with geopolitical uncertainties and trade war talk largely to blame.
UK and European funds are still out of favour – investors pulled a further £280 million net out of these sectors in June. Fixed income investments also saw net outflows of £327 million, with strategic bonds the least popular sector as some £413 million net was taken out of these investments.
Chris Cummings, chief executive at the Investment Association, says: ‘Brexit uncertainty continues to weigh on investors, with UK equities facing a further month of outflows.’
Meanwhile, some £291 million net was put into global funds, the best-selling sector in the month, closely followed by the mixed investment 40-85% shares and North America sectors.
Tracker funds continued to be a popular option too, and now account for 14.1 per cent of all money invested.
Laura Suter, personal finance analyst at AJ Bell, says: ‘The withdrawal from fixed income funds was likely a result of investors expecting the Bank of England to raise interest rates. Strategic bond funds had been seeing inflows since the Brexit vote but were hit hard in June. It marks a clear turnaround for investors.
‘It will interesting to see in next month’s figures how investors react as rates rise, and whether they start to shift back to UK equity funds amid hopes of a strong economy.’