Credit: This story was first seen on Funds Europe.

Due to BREXIT uncertainty, especially in July when a governement leadership race took place when talk of a no-deal Brexit increased, billions of pounds left UK-domiciled funds, transferring into offshore funds, mainly in Ireland and Luxembourg.

According to Funds Europe, Calastone “blamed an increase in the rhetoric around a no-deal Brexit”.

Calastone calculated the figures based on “millions of predominantly UK retail investor decisions that pass through its transaction network”.

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Fund flow figures also showed dramatic outflows generally from equity funds, with a drift towards passive funds. In current market conditions, active funds are now the “big losers”.

In spring, when MPs voted to rule out a no-deal withdrawal from the EU, investors had been adding to their UK equity and holdings. However, with a no-deal now “[…] “considered by many to be official government policy”, there was a flood of withdrawals from UK-focused funds, including the equity income sector, which is dominated by funds investing in UK equities and which saw £333 million of outflows.

Edward Glyn, Calastone’s head of global markets, said: “In periods when an orderly exit has looked ever more likely, investors have bought undervalued UK-equity funds. But they pass judgement swiftly when the no-deal rhetoric ramps up.” […]”

Should investor sentiment turn negative, trends indicate that active funds are ever more likely to shoulder more of the outflow burden.

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