UK investors displayed a strong preference for US equities in March, injecting £2.30 billion into equity funds and contributing to a robust start for Q1 2024. According to Calastone’s Fund Flow Index (FFI), this surge propelled total inflows to £6.97 billion since January.
North American funds emerged as the top choice, attracting an unprecedented £5.72 billion in the first quarter alone. This marked a significant shift in investment strategy towards transatlantic markets, surpassing inflows from the previous nine years combined.
While North American funds thrived, global equity and emerging markets also experienced solid inflows, albeit with a slowdown in European funds. Conversely, UK domestic equity funds witnessed outflows, reaching their highest levels since February 2023.
Despite this trend, socially responsible investing gained traction, with ESG equity funds seeing sustained inflows. However, non-ESG equity funds attracted larger inflows in March, indicating diverse investor preferences within the UK market.
Edward Glyn, head of global markets at Calastone, highlighted the surge in global equity markets since October. He noted concerns among UK investors regarding the growth prospects of UK equities compared to other regions. Glyn emphasized the resurgence of profits in the US as a significant driver of fund inflows and higher share prices.
Fixed income fund inflows surged to their highest level since June 2023, with investors injecting £460 million. However, mixed asset funds and the property sector sustained outflows amidst this environment.
Glyn pointed out challenges faced by bond markets in 2024, including deferred hopes for rate cuts and rising yields. These conditions attracted investors seeking high income and potential capital gains amidst anticipation of future rate declines.
photo source: Google
By: Montel Kamau
Serrari Financial Analyst
5th April, 2024
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