UK general election campaign drives strong inflows to UK equity funds, but Labour manifesto spooked investors______

Equity funds enjoyed their strongest inflows of 2019 in November following months of pessimism, according to the latest Fund Flow Index from Calastone, the largest global funds network. UK equity funds in particular welcomed inflows, as investors jockeyed for position ahead of the election. After shedding over £1bn in capital during the third quarter as investors fled the prospect of a disorderly Brexit at that time pencilled in for October, UK equity funds saw net new capital of £186m added in November. In October, fund flows were close to net zero.

The key highlights from this month’s FFI:

  • UK general election drives strong inflows to UK equity funds in November, following four months of pessimism
  • Investor optimism being driven by prospect of an end to political deadlock
  • Publication of Labour Party manifesto spooked investors, driving sudden reversal of inflows
  • More widely equity funds saw their strongest month of inflows in 2019, even though the year is still on track for the weakest equity fund inflows on Calastone’s record
  • Active equity funds finally broke a run of many consecutive months of outflows, but investors continued to strongly prefer index funds

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