UK investors piled into equity funds at the fastest rate for nearly three years last month – but shunned the sluggish British market in favour of surging US valuations.
Inflows of £2.66billion in February were the highest since May 2021, but £633 m was pulled from UK-focused funds, according to industry group Calastone.
Instead, it was North American equity funds that benefited most, with a record £2.54billion added, as investors sought to climb aboard the tech-driven rally in New York. Even European equities gained, with inflows of £363million.
Meanwhile, China’s sluggish economy left Asia-Pacific funds struggling, with outflows of £229million.
Overall, equity funds are enjoying a bounce-back among UK investors, with £6.31billion piled in over the last four months after a ‘punishing’ 18 months which saw £8.6billion pulled out.
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Inflows to money market funds – which buy safe-haven investments such as government bonds – have slowed sharply since last year as an appetite for higher risk comes back.
Edward Glyn, head of global markets at Calastone, said investors were ‘jumping back into equities feet first’ with interest driven by the US stock markets rallying by more than a fifth in value since late October.
‘A rising tide is not lifting all boats, however,’ Glyn added.
‘Nothing can persuade UK investors to add capital to their home market, despite very low comparative valuations.’
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