Outflows from UK equity funds gathered pace in August, with £2.6bn of assets being pulled from the market area over the course of the month, according to Morningstar’s latest fund flows report.
Equity funds across the board saw a small net redemption but UK vehicles proved least popular as the stockmarket continued to lag its peers.
Some £213m of outflows were attributable to AXA Framlington UK Select Opportunities alone, although assets were carved out into a segregated mandate - which was not taken into account in the report.
Some £400m was also withdrawn from State Street UK Equity Tracker.
According to Morningstar data, investors started the year bullish on small- and large-cap UK equity funds, while UK equity income funds suffered outflows as a result of LF Woodford Equity Income returning some money to investors.
In March and April, UK equity funds - particularly large-cap vehicles - experienced inflows of £2.5bn and £3bn respectively as investors took advantage of the market sell-off.
Since then, however, UK equity funds have suffered relative to other sectors as "investors sentiment has turned sour", according to the report.
However, some UK equity funds experienced inflows, meaning net redemptions totalled £2.3bn. Invesco Income & Growth saw a net inflow of £61m - the highest of any of its UK-domiciled funds.
Vanguard's most popular product over August was Vanguard FTSE UK All Share Index, which saw net inflows of £126m - half of the total amount for the group overall.
Overall, fund flows across all sectors remained close to zero, with a large number of funds suffering outflows and only a handful of vehicles experiencing significant inflows.
Equity funds generally struggled with redemptions, with the exception of growth-style equity and sustainable funds.
Fixed income funds - particularly sterling-hedged global mandates - also proved popular with investors in August, attracting £872m of assets.
Alternative funds saw small outflows for the second consecutive month - the first time that outflows for the sector have been less than £200m since mid-2018.
Meanwhile, 'allocation' funds saw their assets grow by 1% through flows, although this was largely helped by fund launches from large pension funds such as Schroder Countrywise Managed Balanced and FP Brunel Diversifying Returns.
In terms of fund houses, BlackRock saw net inflows of £1.6bn in August - one of the highest-ever net inflows for the group - with approximately two-thirds of this being piled into the £654m BlackRock ACS Climate Transition World Equity and £314m BlackRock ACS World ESG Equity Tracker funds.
Baillie Gifford also fared well with net inflows of £312m this year, which was largely the result of its growth-orientated strategies gaining popularity.
However, Baillie Gifford Long Term Global Growth Investment suffered redemptions of £303m despite its year-to-date total return of more than 70%; this was likely due to a large investor leaving the strategy.
Dry powder can be useful for pension scheme portfolios, but to make it attractive schemes need to make sure the assets are both available and not so low return they dilute wider return characteristics. Jonathan Hobbs, Kevin Kneafsey, Matthias Scheiber,...
The US Federal Reserve sent out "strong, powerful guidance" on Wednesday (16 September), as it predicted interest rates would stay near zero until at least the end of 2023.
In this live blog, Professional Pensions' sister title Investment Week collates all the breaking market news, analysis and opinion on equity, bond and currency movements as well as the impact of trade wars, tightening monetary policy and the Brexit negotiations....
A record-breaking 150 ‘dog’ funds have been identified in the latest bi-annual Bestinvest Spot the Dog report, with total assets of £54.4bn sitting in these vehicles.
Underfunded defined benefit (DB) pension schemes in the UK are over-dependent on historically improbable equity returns, analysis by Willis Towers Watson reveals.