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Investors rush for the exit as no-deal Brexit looms, while offshore havens see strong inflows

Fund Flow Index - August 2019

Political upheaval in the UK and the sharply rising likelihood of a no-deal Brexit caused a dramatic outflow of capital from equity funds in July. UK investors rushed to sell their holdings at their fastest rate since October 2016. A net £1.3bn flowed out of equity funds, on the back of record trading volumes, pushing the FFI: Equity down to just 46.1.

Here are some of the key highlights from this month's FFI:

  • Equity funds see £1.3bn of outflows, the largest since October 2016
  • UK-equity funds hit hardest, but almost all equity fund categories saw outflows
  • Daily trading patterns show selling of UK-equity funds was closely linked to growing rhetoric on no-deal Brexit ahead of the appointment of the UK’s new government
  • Active-equity funds saw record outflows
  • Lower risk asset types, like fixed income, benefitted from investors’ appetite for lower risk
  • Brexit fears spurred sharp increase in flows of capital to offshore funds