Global equity funds most in demand as investors shun UK funds

Published 08/01/2025, 13:02
Updated 08/01/2025, 13:42
© Reuters.  Global equity funds most in demand as investors shun UK funds

Last month capped off a record year for fund inflows from UK investors, but not for funds backing British companies, which saw net outflows for the ninth year in a row.

Data from Calastone found equity funds enjoyed the most demand compared to fixed-income and other funds.

UK investors mostly put their money into global funds and those focused on North America.

UK-focused funds saw net selling of £221 million last month, which was the second-best month since May 2021, Calastone said.

Overall, UK-focused funds suffered a ninth year of outflows, and with a total of £9.6 billion the annual outflows were the worst recorded relative to the wider market since the research began.

For the year as a whole, investors added a net £27.22 billion to total equity fund holdings in 2024, exceeding the previous record of £19.8 billion from 2021.

Global equity funds were most popular at £19.5 billion of inflows, followed by almost £12 billion for North American funds.

Asia-Pacific also remained out of favour, suffering the worst outflows in the survey's history record of £1.8 billion, within which funds investing in Greater China saw outflows but Japanese equities bucked the trend.

Weak bond markets from the summer saw inflows to fixed income funds fall sharply to £1.3 billiion in 2024.

Almost all the inflow were to passive equity funds, with exchange-traded funds (ETFs) and other trackers getting £29.6 billion of inflows, while actively managed funds were hit by £2.4 billion of net outflows, which bodes badly for traditional asset management companies.

Read more on Proactive Investors UK

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