Investors pull more than $1 tn from UK equity funds

Nov 27, 2018
Brexit and Corbyn becoming PM are reasons behind mass exodus

Investors have removed more than $1 tn from UK equity funds since the EU referendum in 2016 amid concerns over Brexit and the looming prospect of Labor Party leader Jeremy Corbyn becoming UK prime minister, according to the latest data and analysis.

The consistent business uncertainty due to Brexit and the possibility of a Labor government led by Corbyn have tainted UK equity funds, which have lost $1.01 tn in outflows since June 2016, according to EPFR Global, the Massachusetts-based data provider.

Putting this into context, this means investors have pulled money from UK equity funds every week since the UK voted to leave the EU.

Outflows swelled to $19.4 bn in the week when UK Prime Minister Theresa May presented her 585-page Brexit withdrawal plan to the cabinet – the highest level of outflows since the 2007-2008 global financial crisis. In comparison, in the 12 months preceding the Brexit vote, UK equity funds attracted inflows of $127 bn.

A growing distaste for UK equities among investors has grown as political and economic tensions over Brexit have deepened ahead of the conclusion of negotiations with the EU. Last month, the London stock market was rated least popular of 22 asset classes among global fund managers, according to a Bank of America Merrill Lynch survey.

This follows a survey of 400 advisers conducted by Schroders, the London-based asset manager, which finds that 35 percent of its clients have either moved assets out of the UK this year or are considering doing so, up from 21 percent in the previous year’s survey.

The US ranks as the top destination for money reallocated from UK assets.

The FTSE All-Share index has fallen 9.7 percent so far this year, but the UK benchmark is still up 9.5 percent since the Brexit vote in 2016.

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