Savers sell investments to meet rising mortgage costs

UK investors withdrew nearly £1bn from equity funds in July despite a rally in global stock markets, according to Calastone. The latest net flows data from the fund transaction network shows investors sold £983m of open-ended equity funds last month, the highest outflows since September last year, when the government’s mini-Budget fiasco stoked financial turmoil. This came as the FTSE All-Share and MSCI World indices both rose more than 2% across the month, while the S&P 500 gained more than 3%.  Over the last three months, net outflows from equity funds have totalled nearly £2bn, in a reversal of strong flows in March and April. 

Calastone said equity investors had taken the recent rebound as an opportunity to withdraw their capital. The firm’s head of global markets Edward Glyn said: ‘For now, investors remain very risk averse, choosing the strong rally in global share prices as an opportunity to withdraw cash rather than bank on further gains.’ In July, UK equity mandates were once again the hardest hit market, with £710m withdrawn – marking 26 consecutive months of net outflows from the region. Outflows from North American equity funds were the second highest on record for Calastone, while net selling of European and Asia Pacific funds also picked up. Property and mixed asset mandates also saw moderate withdrawals. In addition, ESG funds suffered a third consecutive month of outflows for the first time, with £376m taken from such strategies in July. That brought the cumulative outflow from sustainable funds to more than £1bn since May. Global equity funds saw a resurgence during the month, however, attracting £837m in new money, while emerging market strategies also continued to prove popular. The latter took in £305m, bringing year-to-date inflows to nearly £2bn. 

Investors continued to seek refuge in money market and fixed income strategies, with the former attracting £403m in inflows last month. Inflows to money market funds over the last six months exceed those from the previous four years combined, with May, June and July each seeing some of the biggest inflows on record. Rising interest rates have meant such products are able to offer superior short-term yields.

If you're worried about your investments and often asking yourself should I move my money into cash? Partner and Chartered Financial Planner Roger Clarke answers that direct question in a recent article. Read the full article here.

This information is correct as at 21/08/23

Note: This article is for general information only, does not constitute individual advice and should not be used to inform financial decisions. Additionally, past performance is not a guide to future returns. Investment returns are not guaranteed, and you may get back less than you originally invested.

Article source: https://citywire.com/new-model-adviser/news/calastone-investors-pull-1bn-from-equity-funds-despite-july-bounce/a2423138