personal finance

UK funds suffer record outflows in wake of Woodford


UK funds suffered record outflows of £4.6bn in the third quarter, as Brexit uncertainty and the fallout from the Woodford scandal damaged investor sentiment in British equities.

Half of the outflow was due to investors pulling record amounts of cash from UK equity products, according to the latest data from the Investment Association, the UK lobby group whose 250 fund managers control assets of £7.7tn.

Asset management groups that have suffered investor withdrawals in recent months include Jupiter, Invesco and Standard Life Aberdeen.

Investors have turned against British stocks amid uncertainty about the strength of the UK economy and Brexit’s impact on growth. Sentiment has also been hit by the downfall of Neil Woodford, once the country’s most high profile stockpicker, whose Equity Income fund was suspended in June.

However, the IA figures also showed that tracker funds experienced net retail inflows across all asset classes of £4.6bn in the third quarter.

Chris Cummings, IA chief executive, said: “Global uncertainty cast a long shadow over stocks and shares in the last quarter.

“Savers particularly shied away from UK equities with £2.3bn of outflows.”

He said bond funds benefited as investors looked for a “port in the storm”, with mixed asset funds also performing well. Bond and mixed asset funds each experienced inflows of £2.2bn in the quarter.

Adrian Lowcock, head of personal investing at broker Willis Owen, said fears of a global slowdown and a rising possibility of a no-deal Brexit had seen investors cut their exposure to stocks.

“The Brexit situation was so unpredictable that it was easier for investors to just take the risk off the table and adopt a wait-and-see approach,” he said.

Laura Suter, personal finance analyst at investment platform AJ Bell, said: “The tally of outflows since the Brexit vote keeps ratcheting up, and is now within touching distance of £15bn — leaving quite a hole in UK fund managers’ portfolios.”

She noted one “bright spot” in September was emerging markets, which saw £270m of net inflows.

Property funds also experienced outflows in September, with net retail outflows of £82m.



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