Investors Lured Away From Markets By Higher Interest Rates – IA Data

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  • June saw a net retail outflow of £986 million – the first monthly outflow this year.
  • In June, North American equity funds had a £657 million outflow, despite improved performance in the US market. This impacted on sales to tracker funds which dipped to £272 million inflows.
  • Japan equity funds saw £227 million invested in June, the only equity region with inflows.
  • UK gilts were the top best-selling sector for June.

The Investment Association released their monthly stats today Retails Sales | The Investment Association (

High Interest Rates Lead To Investors Pulling Out Funds

“Investors pulled nearly £1bn out of funds in June as the macro-economic picture moved both sentiment and opportunity. Challenging inflation and a mixed domestic growth picture turned investors off stock markets – but also pushed up interest rates, making UK gilts an attractive investment for those searching for yield and capital preservation. Japan bucked the trend, as a rallying market tempted investors to buy the under-valued region.

HL clients were split between caution – money market funds, and opportunistic – technology funds and trusts. This speaks to the narrow set of companies driving performance in the US, where outside of a handful of technology companies, the remainder of the stock market has had a more challenging year.

Since June, when this data was collated, inflation has fallen, though sits stubbornly above Bank of England target, and the Bank has raised interest rates today for the 14th time in a row to 5.25%, predicting higher rates for longer – three years, in fact. If this backdrop persists, equities will struggle and the investor appeal of government debt will remain.”

Top funds, June (net buys, alphabetical)

abrdn Sterling Money Market
Baillie Gifford American
Fidelity Index World
Legal & General Cash Trust
Legal & General Global 100 Index
Legal & General Global Technology Index Trust
Legal & General International Index Trust
Legal & General US Index
Rathbone Global Opportunities
Royal London Short Term Money Market

Top investment trusts, June (net buys, alphabetical)

Allianz Technology Trust plc Ordinary 2.5p
AVI Global Trust plc ORD GBP0.02
City Of London Investment Trust Ordinary 25p Shares
Greencoat UK Wind plc Ordinary 1p
Henderson Far East Income Ltd Ordinary NPV
HICL Infrastructure plc ORD GBP0.0001
JPMorgan Global Growth & Income plc Ordinary 5p
Merchants Trust plc Ordinary 25p
Polar Capital Technology Trust plc Ordinary 25p
Scottish American Investment Co plc Ordinary 25p Shares

Article by Emma Wall, Head of Investment Analysis and Research, Hargreaves Lansdown