UK investors have withdrawn almost £4 billion from equity funds in June, according to Morningstar data, bringing the six-month total to almost £7 billion for the category.
Fixed income was the only category in positive territory in June, with inflows of £838 million, while all other categories saw opposite trends. The picture for the year to date is similar too – fixed income is the only major asset class with inflows, but money markets and “others” also received net inflows. Over the past six months, a total of £7.4 billion was redeemed from all categories, according to our data which shows inflows and outflows from strategies domiciled in the UK.
According to Morningstar’s associate analyst Jack Fletcher-Price, the outflows from equity funds are the largest since September 2022, when Liz Truss served as the UK’s prime minister. This turbulent period saw UK fund outflows hit a 10-year high as the pound slumped and gilt yields spiked.
The UK Large-Cap Equity Morningstar category featured in the top outflows again in June, as has become usual. June outflows for these funds totalled £817 million (from £594 million outflows in May), and this year, this has reached net £6.2 billion. This coincides with a period of weakness for UK equities amid outperformance from US and European markets.
The total June outflows were also the largest on aggregate across asset classes since October 2022. What’s more, £4.9 billion were withdrawn from active funds, meaning only a mere £493 million into passive funds helped soften the blow.
Sustainable equity funds have shown a tendency to attract inflows even in more adverse economic environments, while non-sustainable funds largely see withdrawals. We saw this narrative flipped on its head in May, when non-sustainable strategies saw their second month of net inflows in the past 12. In June, however, both categories suffered net redemptions. In total, sustainable equity funds have now seen more months of outflows than inflows this year, while the six-month total saw a redemption of £3.6 billion.
GBP Government Bond and Global Bond categories proved the most popular among investors, with £928 million and £442 million added respectively. For the former, the inflow brings the total added this year to £2.1 billion.
Another category that has done well is Japan Large-Cap Equity, with £257 in inflows. M&G Japan is the fund that sees – and continues to see – strong inflows, as net additions have now crossed the £1 billion for the year. Carl Vine, who manages the M&G strategy, previously shared his thoughts on the booming Japanese market this year, believing there are still plenty of opportunities to capture in the space.
On the fund house side, BlackRock, Aviva, and HSBC attracted investments – but they were the only three in the top 10 fund groups by assets. Baillie Gifford, Royal London, and Legal & General had the largest net outflows.
