The bouyant performance of most equity markets in April wasn’t enough to boost investor sentiment, with a net £640m pulled from equity funds in the month.
The latest fund data from the Investment Association, published today (May 2), showed investors selling their equity funds predominantly put the cash into asset classes viewed as cautious, such as money market funds, which both had net inflows during the month, with investors ploughing £810m into bond funds. The only equity sector to have net inflows was IA Global.
That came despite all major equity markets reporting gains in April.
Investors withdrew £478m from European equity funds during the month, and £445m from UK funds. This takes total outflows from the UK above £2bn in the past year, and to £12bn since the UK referendum to leave the EU in June 2016.
Chris Cummings, chief executive of the Investment Association, said: "Despite a bumpy start to the year, which saw £2.4bn of outflows in the first quarter, funds under management increased to £1.2trn, buoyed by fund performance.
"Ongoing economic and Brexit uncertainty continued to impact Europe and UK equity funds, with savers pulling out £1.4bn and £816m, respectively, since the start of the year.
"Savers have turned towards global equity funds and mixed asset funds in the first quarter, whilst fixed income funds have seen a return to inflows."
Jason Hollands managing director at Tilney, said: "While that may be understandable for anyone who reads the daily diet of headlines about UK politics, it does not make sense from an investment perspective.
"UK shares are at attractive valuations, they offer compelling dividend yields and the market is home to many world-class companies.
"Brexit anxieties have arguably opened up a fantastic opportunity for those willing to buy shares in the current environment.
"The recent spike in the oil price, as supply is impacted by sanctions on Iran and Venezuela and turmoil in Libya, provides a further tailwind to the UK equity market, given the significant representation of energy stocks listed on the market."
david.thorpe@ft.com
