Market volatility caused huge selloff
Investors reacting to the extraordinary turnover of UK leaders, who enacted unsupported budgets, resulting in government outcry and enormous market instability, pulled £27.9bn from UK funds in September.
A new record
The amount caused by market volatility is more than in any month of any other year on UK record. It’s a regrettable achievement, since it includes the global financial crisis of 2008 and the kick-off of the Covid-19 pandemic in March 2020, when investors even sold gold.
The Refinitiv Lipper UK Fund Flows report concludes that “What is different this time is the rapid ratcheting of rates in a high-inflation environment. It is possible that, in the retail world at least, investors are cashing in to reduce their liabilities.” The report goes on to point out that the September figures mark the eighth month of net retail outflows this year.
Funds seeing the highest outflows were equity funds, followed by global equities.
Where has the money gone?
The report on market volatility does not show where the money has been moved, though Morgan Stanley and HSBC were the two largest-selling promoters, with the flows of both being dominated by money market funds. There has been a £12bn positive flow into money market vehicles. However, money market options do not account for all of the outflow, and they cannot safely guard cash against inflation. Experts expect that people are paying off mortgages to avoid increasingly high lending rates.
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