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Investors give thumbs down to equity funds as Omicron bursts on to the scene

Fund Flow Index - December 2021

The arrival of Omicron in November prompted abrupt sales of equity funds. As governments slapped new restrictions on travel and reimposed mask mandates, investors reacted swiftly, selling £83m of their equity fund holdings on Friday 26th and Monday 29th November. The overall volume of transactions leapt by 60% between Thursday and Monday as investors adjusted their holdings to reflect their first assessment of this latest episode of the pandemic.

Key highlights from this month's FFI:

  • Omicron’s arrival prompted abrupt selling of equity funds at the end of November to the tune of £83m over a two-day period
  • A sharp increase in trading volumes indicated significant investor uncertainty
  • But it’s too soon to judge the impact of the new variant – Calastone expects more volatility in the coming weeks
  • For the whole month of November, equity funds saw inflows thanks to record buying of ESG funds
  • But record inflows to ESG funds disguised rising risk aversion – Calastone saw record outflows from North American and European equity funds as well as strong selling of UK-focused funds
  • Risk aversion saw switching into safe-haven money-market funds