“Unloved” UK equity funds suffered outflows for the third year in a row in 2023, according to fund network Calastone.
The company’s latest fund flow index showed overall there were £1.19bn of inflows into equity funds, but this was not enough to prevent annual outflows due to the outflows suffered by UK funds.
An update from the company read: “Among geographical categories, only perennially unloved UK-focused equity funds saw outflows, though the £418mn withdrawn was well below the monthly average for 2023 (-£667mn).”
Calastone put this down to volatile market and economic conditions which resulted in outflows in eight months in 2023.
It added: “Some categories have fared worse than others – 2023 marked the third consecutive year, and December the 31st consecutive month of outflows from UK-focused equity funds.
“Without the £8.01bn of outflows from UK equities in 2023, all other kinds of equity funds between them attracted £6.77bn of new capital between them.”
Edward Glyn, head of global markets at Calastone, went on to say equities were “back on the buy list” at the end of 2023 following a turnaround in the markets and indications rates may drop.
Looking forward, he said: “Many central banks are reluctant to signal rate cuts are coming, though the markets are ignoring them for now.
“The extent of the economic slowdown in the UK and Europe, and whether the red-hot US can engineer a soft landing are also crucial to the outlook for asset prices – and fund flows.”
tara.o'connor@ft.com
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