UK Investors’ Concerns And Caution Continued In May – IA Data

Published on

UK investors put £356 million into funds in May, according to data published today by the Investment Association (IA).

Other key findings for May 2023:

  • Fixed Income funds saw inflows of £632 million, while Government Bond was the top selling sector with net retail sales of £658 million.
  • Global funds were the top selling equity region with net retail inflows of £261 million.
  • Tracker funds saw net retail inflows of £1.0 billion in May 2023.
  • Money Market saw inflows of £500 million.
  • UK Gilts followed with net retail sales of £344 million.

UK Investors Continued Their Cautious Optimism In May

“Despite swirling macroeconomic concerns investors continued their cautious optimism in May, buying into the market – good news after such a torrid 2022 for flows. What they are buying is telling – while global funds attracted some inflows, it was fixed income that proved most popular, with government bond funds the top selling sector.

This is hardly surprising given the central banker action over the past year. After years of only being offered attractive yields on equities and alternatives, high inflation has forced the Fed, Bank of England, ECB and other central banks across the globe to hike rates, offering investors the chance of a decent rate of interest on cash, and in turn government bonds.

While equity markets continue to rally, it is notable that investors are hedging their bets, pursuing two distinct investment strategies – buying US funds and growth-biased equities alongside money market funds, gold and gilts. Cash savings continue to attract significant flows too.

These investor patterns reveal the confusion of navigating a seemingly disconnected market and macro. The most bought funds for June on HL saw a boost in optimism however – with tech, US, global and growth names interrupted only by renewable energy and infrastructure, despite sticky inflation and worrying growth indicators. The outlook? Expect more volatility from here, and remember investing is for the long term.”

HL data – Top Funds (net buys, alphabetical)

Baillie Gifford American
Fidelity Index World
Fundsmith Equity
Legal & General European Index
Legal & General Global Technology Index Trust
Legal & General International Index Trust
Legal & General US Index
Rathbone Global Opportunities
UBS S&P 500 Index
Vanguard LifeStrategy 100% Equity

Top Investment Trusts (net buys, alphabetical)

City Of London Investment Trust
F&C Investment Trust
Greencoat UK Wind
Henderson Far East Income
HICL Infrastructure
JPMorgan Global Growth & Income
Merchants Trust
Murray International Trust
Polar Capital Technology Trust
Scottish Mortgage Investment Trust

Article by Emma Wall, head of investment analysis and research, Hargreaves Lansdown