Equity funds witnessed their strongest inflows since April in November 2018 according to Calastone’s Fund Flow Index (FFI) as UK investors took advantage of the sharp drop in global stock markets at the end of October.
November saw equity funds hit £782 million of net inflows as well as the FFI rising to 52.9, its highest level since January 2018.
North American equity funds experienced the best net inflows in over a year, as the FFI North America was at 60.1 which reversed net sales seen in October.
Investors’ enthusiasm regarding UK equities managed to hold while European equities were still in outflow territory as economic news from the Eurozone continues to distress investors.
Property funds are taking a beating with their second consecutive month of outflows bringing net sales to £208 million since October started and the worst performance since the aftermath of the Brexit vote in 2016.
Overall, UK investors committed £2.2 billion to funds in November which is more than double October’s total and takes the FFI to 54, which is a rise from the two-year low of 51.6 seen in October.
Even though November was seen as a positive month, the month itself was split into two halves. During the first two weeks fund flows were positive every day. However, the second half saw volatility rear its head once again in global markets which lead to investors pulling out their capital.
Edward Glyn, Calastone’s head of global markets, did however give this warning “November has been a good month for fund flows but investors are much more skittish than the positive overall figures for the month suggest. We expect Q4 2018 to see the weakest fund flows since 2016. Asset prices are currently very volatile, so investors are watching the markets day by day, and dipping in and out in reaction to fast-changing news.
“Timing the markets is tricky even for professionals, but investors are clearly giving it a go to try to lock in short-term profits. Fund flows longer term are structurally positive, however, as investors aim to steadily build their savings.”
Calastone is a transaction network operator which produces a FFI every month. A reading of 50 indicates that new money investors put into funds equals the value of redemptions (or sales) from funds. A reading of 100 would mean all activity was buying and a reading of 0 would mean all activity was selling.
