Equities pulled in a net £1.2bn throughout the month of June, bringing quarterly inflows into the green at a total of £2bn, according to data from the Investment Association (IA).
The quarter marks a turning point for equity funds, which have been unable to escape quarterly outflows for the past two years. The first three months of 2024 saw outflows of £1.6bn, with each quarter in 2023 experiencing outflows of near or above £4bn.
While UK equities remained firmly as net outflows for the second quarter of the year, all other regions rang into the net positive range, led by global equities with £2.7bn. In June, Europe ex-UK equities also attracted £868m as the European Central Bank called for a 25 basis-point cut to interest rates.
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Miranda Seath, director, market insight & fund sectors at the IA, said: “June has seen a return to inflow as investors opted to allocate capital back into equities. Investor confidence has been building throughout Q2 2024 as inflation has calmed and, in the UK, we have seen the first base rate cut from the Bank of England since March 2020. This decision could help to improve confidence and flows as we head into the second half of 2024.
“However, recent movements on the global stage on the back of poorer than anticipated US employment data have highlighted the complexities of the macroeconomic environment. Whilst the health of the US economy has implications for all major markets, it’s critical that investors remain focused on long-term goals rather than short-term market fluctuations.”
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The inflows to equities were matched by money market funds, with short term money markets gathering £1.5bn for the month. Fixed income, however, dropped £1.2bn in June, with the first half of the year now staying barely positive at £58m in net inflows. While the sector as a whole struggled, corporate bonds managed to be the third best-selling sector for June, collecting £770m.
“Investors thrive on greater certainty and in the UK, investor sentiment should be further improved by the new Government’s commitment to driving growth and maintaining fiscal responsibility. Following a prolonged period of outflow, we are beginning to see conditions that could give a boost to UK equities as we move into the autumn.”
This story was written by our sister title, Portfolio Adviser
