Investors Withdraw Record Sums from Equity Funds Amid High Market Valuations
Data reveals that investors in the UK have withdrawn an unprecedented amount of money from equity funds over the past three months, driven by concerns over soaring stock market valuations.
According to the latest figures from Calastone, the largest global funds network, investors moved away from equities in the third quarter of this year, with outflows reaching £1.20 billion in September alone. Over the entire quarter, withdrawals totalled £3.64 billion, marking the highest outflow in Calastone’s 11-year records.
Instead of equities, investors have shifted toward bonds and money market funds, which are viewed as safer options. This trend coincides with several major stock markets, including those in London, New York, and Tokyo, reaching record highs.
With the exception of funds focused on Europe, all major equity-fund categories experienced outflows in September. Global equity funds saw their fourth consecutive month of net selling (£203 million), while North American funds lost £146 million. Outflows from Asia-Pacific funds extended to 29 months (£209 million), and UK-focused funds shed £691 million.
China, Japan, emerging markets, small-cap, and sector funds also recorded withdrawals, while European funds saw net inflows of £203 million.
Edward Glyn of Calastone noted that UK fund outflows are increasing again, stating:
"While some may hesitate given that UK market valuations remain relatively reasonable, the persistent negative sentiment around the country's economic prospects—including fiscal challenges, widening credit spreads, stagnant growth, and impending tax hikes—appears to be outweighing optimism."
### Key Developments
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"With approximately 80% of UK steel exports destined for Europe, these measures could pose a serious threat to the industry and the jobs it supports nationwide. Given the government’s past support for steel, we urge swift action to secure preferential terms for the UK, including country-specific quotas. Additionally, stronger trade defences are needed to prevent a surge of diverted steel imports due to the EU’s new policies."
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