Investment funds rout blamed on Brexit ‘frighteners’

Equity funds were hardest hit. Picture: Daniel Leal-Olivas/AFP/Getty Images
Equity funds were hardest hit. Picture: Daniel Leal-Olivas/AFP/Getty Images
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Brexit concerns saw individual investors withdraw £3.5 billion from UK managed investment funds in June in an exodus that eclipsed even the 2008 financial nadir.

Figures from the Investment Association showed that equity funds were the hardest hit, with some £2.8bn pulled across the board.

June’s hefty retail withdrawals compare with less than £600 million taken out in January 2008, which was the worst month for investment funds during the financial crisis, according to Hargreaves Lansdown.

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Hargreaves branded the scale of June’s outflows as “extraordinary”, although they represent 0.4 per cent of overall funds under management, which are around twice as high now as they were eight years ago.

The figures reveal that property funds bore the brunt of the withdrawals, while stocks and shares Isas saw £464m pulled out on a net basis.

Laith Khalaf, senior analyst at Hargreaves, said: “The scale of the exodus from investment funds in June is quite extraordinary, with the Brexit vote eclipsing the financial crisis in terms of putting the frighteners on retail investors in the short term.”

But he said investors who withdrew from equity funds are “probably regretting this decision in light of the performance of the stock market since the referendum and that goes in spades for those who cashed in their Isa allowance, losing that tax shelter forever”.

Despite the outflows, funds under management rose to £948bn at the end of June, up from £920bn a year earlier.