Equity funds suffer largest outflows since Mini Budget as ESG funds shed £700m

Equity funds shed £1.2bn in assets last month, the sixth consecutive month of net selling.

Equity funds shed £1.2bn assets in October, the sixth consecutive month of net selling, bringing their total outflows year-to-date to £2.9bn.

UK-focused funds were hit hardest, losing £739m, their worst result since April. Meanwhile, equity income funds saw their 16th consecutive month of outflows with £475m withdrawn.

ESG equity funds followed suit with their second worst month on record posting £700m of outflows, eclipsed only by £953m in outflows in August last year. In total, £3.1bn has been withdrawn from ESG equity funds over the last six months, Calastone found.

Appetite for bonds not abating in face of 'exaggerated' 5% Treasury yields

Specialist sector funds witnessed their worst month on record, losing £275m, as funds investing in infrastructure accounted for almost one third of withdrawals from sector strategies.

Fixed income outflows sat at £79m throughout the month. Calastone found that although most days saw net buying, the sector's performance flipped on 23 October when the US 10-Year Treasury yield surged.

In contrast, global and emerging market funds saw strong inflows, with emerging markets bringing in £311m, pushing them towards their best year on record.

Mixed asset funds also saw record performance, gaining £1.6bn throughout the month, a 50% gain from September, while money market funds gained £586m, the third best month for the sector on Calastone's record.

Edward Glyn, head of global markets at Calastone, said: «The bond-market crunch has brought a deepening sense of crisis to capital markets, even though the real economy has held up relatively well in the face of higher interest rates and tighter credit