UK investor confidence fell to its lowest level in two years in October as falling share prices spooked investors, according to the new Fund Flows Index (FFI) from Calastone.
The new index showed that equity funds had inflows of just £198 million in October while inflows into global funds dried up altogether, after consistently being the most popular equity category since early 2016.
European funds saw outflows of money but relatively undervalued UK equities, which investors have avoided altogether since the Brexit referendum, saw inflows of £244 million.
Buying of UK equity funds only began during the October EU summit, as investors became more optimistic on a Brexit deal, FFI said.
In contrast, FFI found fixed income funds were “no safe haven in October”, and investors withdrew money from them for the first time since early 2016.
Edward Glyn, Calastone’s managing director, head of global markets, said: “2018 is shaping up to be a disappointing year for fund inflows as market conditions have deteriorated in recent months, but overall trading volumes are very high as investors reassess their holdings.”
Glyn concluded: “The sea change in appetite for offshore funds is clearly linked to Brexit: the expected loss of passporting for the UK’s financial services industry, coupled with uncertainty about the UK’s regulatory future, and nervousness about Britain’s unstable political situation, have driven investors to move capital outside the country.”
