Calastone: UK investors shun stocks despite global rally

investmentweek.co.uk:

July 2023 was the 26th consecutive month of net outflows for equity funds.

July 2023 was the 26th consecutive month of net outflows for equity funds, with investors selling £983m of their holdings, the highest outflows level since September 2022 following the Mini Budget.

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Over the past three months, investors pulled £1.95bn from equity funds, despite global stock markets rising strongly.

ESG focused funds recorded the biggest outflows for the period, shedding a record £376m. This was the third consecutive month of outflows, the longest run of selling on record, Calastone noted. Since May, ESG funds lost more than £1bn.

The UK equity sector also recorded outflows totalling £710m, with North American equity focused funds following suit with £588m net outflows.

Net selling of European, Asia-Pacific and country funds also accelerated in July, Calastone found, along with property and mixed asset funds, losing £66m and £82m, respectively.

Emerging markets and global equity funds bucked the wider trend however and continued to see inflows over the period, £305m and £837, respectively. Small technology funds gained from the AI boom, with £61m in inflows — the fourth consecutive month of new money after 15 months of solid outflows.

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Fixed income and money market funds also remained favourites among UK investors, with inflows of £347m and £403m, respectively, in July.

However, this was more than half the level of inflows fixed income received the month prior (£880m), due to July being a more volatile month for bond yields, according to Calastone.

Edward Glyn, head of global markets at Calastone, said: