Investors Rush For Exit As No-Deal Brexit Looms
Political upheaval in the UK and the sharply rising likelihood of a no-deal Brexit caused a dramatic outflow of capital from equity funds in July. UK investors rushed to sell their holdings at their fastest rate since October 2016. A net £1.3bn flowed out of equity funds, on the back of record trading volumes, pushing the FFI: Equity down to just 46.1.
Latest in from our #fundflowindex – Investors rush for the exit as no-deal Brexit looms, while offshore havens see strong inflows (link: https://t.co/wZ0f3m1uQ1) #data #brexit #funds pic.twitter.com/BkblqbrqEP
— Calastone (@CalastoneLtd) August 7, 2019
Here are some of the key highlights from this month’s FFI:
Equity funds see £1.3bn of outflows, the largest since October 2016
UK-equity funds hit hardest, but almost all equity fund categories saw outflows
Daily trading patterns show selling of UK-equity funds was closely linked to growing rhetoric on no-deal Brexit ahead of the appointment of the UK’s new government
Active-equity funds saw record outflows
Lower risk asset types, like fixed income, benefitted from investors’ appetite for lower risk
Brexit fears spurred sharp increase in flows of capital to offshore funds
All LCH services reported record volumes of over-the-counter clearing.
EU law will continue to apply during the implementation period.
Managers should continue to modernize legal and compliance.
Global asset allocators are likely to shift money back to the UK.
Industry says without an extension, EU clearing members could face trouble in UK CCPs.