Equity funds see largest outflows since mini-budget scare
October saw the largest outflows from equity funds in over a year, according to the latest Fund Flow Index from Calastone.
Equity funds suffered outflows of £1.20bn in October. It was the sixth consecutive month of net selling and the largest since September 2022’s mini-budget scare. Investors fled for the exit as soaring interest rates put asset prices under pressure.
UK-focused equity funds were hit the hardest in October. The £739mn outflow was the highest since April. European equity funds also suffered their worst month of the year, with outflows of £318mn.
Global funds and emerging market funds continued to attract new capital, meanwhile.
Emerging market funds are currently on track to have their best year on record, should the final months of the year not see significant selling. EM funds recorded inflows of £311mn in October, according to Calastone.
Edward Glyn, head of global markets at Calastone, said equity fund outflows last month were “inevitable” when bond markets were experiencing “wrenching repricing”.
“The bond-market crunch has brought a deepening sense of crisis to capital markets, even though the real economy has held up relatively well in the face of higher interest rates and tighter credit conditions,” he said.
“And when longer-term market interest rates rise like this, asset prices of all kinds come under pressure.”