Equity funds enjoyed one of their best months for two years in May, absorbing £1.1bn of new capital. May 2020 was one of only four months since May 2018 to have seen net inflows exceed the £1bn mark. Moreover, investor enthusiasm for equity funds in recent weeks meant that the flow of net new capital into equity funds in April and May exceeded the previous 18 months’ worth of inflows combined.
Key highlights from this month's FFI:
- Equity funds absorbed £1.1bn of new capital in May, one of the four best months in two years. This follows record inflows in April
- But the euphoria ebbed after the first few days of the month, as nerves over the economy and stock market valuations returned – almost all the buying was in week 1
- Trading volumes were very high, as investors responded to the ever-changing news cycle – this also drove a rare greater preference for active funds during the month
- Active equity funds saw larger inflows (£581m) than passive funds (£493m)
- Dividend cuts in Europe and the UK are the deepest in the world, deterring investors from these fund categories, while strongly performing US equities proved a lure