Equity fund outflows hit fresh record as Budget uncertainty triggered UK selloff
Equity funds have suffered their deepest and most prolonged bout of outflows on record with investors pulling more than £10bn in the past six months, fresh figures have revealed.
UK-focused funds were the hardest-hit in November after haemorrhaging almost £847m, according to data compiled by global funds network Calastone, with analysts pointing to protracted Budget uncertainty among the chief areas of concern for investors.
UK outflows were followed closely behind by US outflows, which saw £812m withdrawn amid nervousness over company valuations. In total, pulled a net £3bn from equity funds during the month, the second-worst month on record after October’s £3.6bn.
Only one month out of the last 55 has seen inflows to UK-focused funds and that followed Rachel Reeves’ first Budget in 2024 when investors crystallised capital gains in the weeks running up to her expected capital gains tax raid, before recycling the cash back into funds afterwards.
December recovery unlikely
Edward Glyn, head of global markets at Calastone, said: “The political narrative has played havoc with UK savers in recent months. Never have we seen such consistent or large-scale selling before.
“The sudden halt in equity-fund outflows that took place after the budget was delivered is clear evidence that many investors were selling their holdings as concerns rose at the possible curtailment of pension lump sum withdrawals, or of further capital gains tax hikes.
“The recent period of policy uncertainty has clearly unsettled investors and, in some cases, prompted reactive decisions they may later regret. Savers benefit most from clarity and consistency, so they can plan properly for long-term goals.”
Peel Hunt’s head of research, Charles Hall, said: “I think we’ll continue to see the same trends that we’ve seen for some time… it would surprise me if there was much of a recovery [in December].”