Proactive Investors - New data from UK funds processor CaLastone showed UK investors pulled money equities at a record rate in October ahead of the Budget.
Some £2.7 billion net was withdrawn last month, according to Calastone, the highest monthly total it has ever recorded
Most of the withdrawals were from UK-focused assets, maintaining a trend that has been ongoing for months, but all categories saw outflows even the high-performing US sectors.
Sell orders surged by 36% month on month to a record £17bn in the four weeks leading up to the Budget said Calastone, spurred by the almost daily reports that capital gains tax was set for a major hike.
Outflows stopped completely on Budget day with buy orders up 40% as investors ‘bed and breakfasted’ investments to lock in gains at the lower tax rate.
Edward Glyn, head of global markets, said: “Fears of a capital gains tax grab in last week’s Budget spurred investors to book their profits and crystallise a lower tax bill well before the Chancellor rose to her feet in the Commons.”
More than one-third (£988m) of the total outflows came from funds focused on UK equities, said Glyn, making it the fourth worst month on record for the sector.
US equity funds also saw the first ‘out’ month in a year while global equity funds recorded net withdrawals for the first time in two years.
By type, income funds accounted for a quarter of the outflows with fixed income demand rising as investors switched to bond funds, which had their best month since June 2023.
Money market funds also saw higher inflows, up by £402 million in October.