Lockdown and Brexit brinkmanship punish UK-focused funds______

Surging Covid-19 infection rates and Brexit tensions prompted a flood of outflows from UK-focused equity funds in October. Outflows totalled £358m during the month, making October the fourth-worst month on record for UK-focused equity funds. Along with income funds, they are the only categories now to have seen five consecutive months of outflows. The FFI:UK Equity fell to 45.2, one of its worst-ever readings. Income funds, which are disproportionately invested in UK equities suffered their worst ever month as £763m left the sector. FFI:Equity Income sank to 34.6, meaning that sell orders were roughly double the value of buy orders.

Some key highlights from this month’s FFI:

• UK-focused equity funds suffer fourth-worst outflows on record
• Surging infection rates, lockdown and Brexit brinkmanship drive investor distaste for UK assets
• European equity funds suffered far smaller outflows – just one fifth of the size of the UK-focused funds – despite equally bad news on the pandemic
• Traditional active funds were punished again, while ESG and index funds proved resilient
• Bond funds benefited from caution on equities, but property funds suffered big outflows as suspensions lifted

View this edition of the FFI in full