UK investors favour global equities over regionally focused funds, revealed Calastone’s fund flow data.
Since 2015, global funds have enjoyed net inflows worth £51.3 billion, while all other geographical categories have gained £909 million of new capital. Nine months have seen net outflows from global funds, compared to 51 months for all other regional strategies combined, said Calastone.
Excluding the “unloved” category of UK-focused funds that suffered the most significant outflows since 2015, regionally focused categories have only gained less than one-third as much as global funds.
Since July 2021, global funds have enjoyed inflows of £18.9 billion, while funds with a regional focus have lost £21.1 billion. Three-quarters of this selling came from UK funds reflecting both its size in the savings mix and “a chronic loss of faith in British assets”, reported Calastone. However, every regional category except emerging markets witnessed outflows during this period.
ESG funds have driven the shift to global funds, accounting for £21.9 billion of the inflows to international funds since 2015 and £13.6 billion since July 2021.
Investment Association data showed that the value of funds investing in UK companies was double that of global funds a decade ago, but things changed after October 2017. May 2023 data showed that global funds billion (£166.4) are now larger than UK-focused funds (£141.1 billion).
Most of the £88 billion increase in global funds under management since 2015 has come from net fund inflows, with the rest due to market movements and retained dividend income.
Edward Glyn, head of global markets at Calastone, thinks the trend is here to stay. “Most of the world’s most successful companies operate globally, so where they are listed is immaterial. We see short periods when particular regions enjoy a moment in the sun – emerging market funds are enjoying significant inflows just now, for example. Overall, investors are content to set their allocation preference to global and allow their monthly direct debits to do the rest,” he said.
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