Equity funds saw outflows in September – their first monthly outflows since October last year – with the UK taking the brunt of selling, data suggests.
Calastone saw £564 million leave equity funds during the month, as measured by transactions from its funds network.
The outflows from equity funds ended a ten-month period of near record-breaking inflows.
UK-focused funds bore the brunt of selling, with outflows of £666 million, while all other geographically focused fund sectors saw inflows, though at a lower level.
European equity funds saw the biggest drop in inflows, down to just £43 million, compared to the £249 million monthly average over the previous 12 months. Global equity and US equity funds were the most popular, absorbing £422 million and £413 million, respectively.
Edward Glyn, head of global markets at Calastone said: “Global markets had a rocky start to September but finished the month in positive territory. There is clearly growing caution about growth – the sharp drop in inflows to European funds accompanies a slew of negative news coming from the Eurozone.”
Fixed income funds shed £769 million in September as investors banked the profits of the bond-market rally and outflows from fixed income funds between August and September were the second largest on Calastone’s record.
Safe-haven money market funds were the main beneficiary of capital leaving fixed income funds.
Glyn said: “Bond markets have rallied strongly over the last six months with yields plummeting as investors watched economies cool around the world and priced in the likelihood of falling interest rates (falling yields mean higher bond prices). Expectations ran high that the US Federal Reserve would cut rates by half a percentage point in mid-September – which it duly delivered – so investors seemingly followed the adage ‘buy the rumour, sell the news’ and banked their gains.”
