Top Stories
UK investors’ stocks sell-off accelerates, ESG ‘boom ends’ – Calastone
Global Banking & Finance Review®
Company
LONDON (Reuters) – Investors in Britain dumped both stocks and bonds in August as they continued to opt for the safety of cash and money-market funds, according to data from fund network
LONDON (Reuters) – Investors in Britain dumped both stocks and bonds in August as they continued to opt for the safety of cash and money-market funds, according to data from fund network Calastone published on Tuesday.
Funds focused on environmental, social and governance issues (ESG) also saw a fourth consecutive month of net selling, down 953 million pounds – taking the total pulled from such funds to nearly 2 billion pounds since May.
Overall, equity funds shed 1.19 billion pounds ($1.50 billion) during the month – the worst since September 2022 – with UK-focused funds hit hardest, with redemptions of 811 million pounds, according to the data.
Fixed income funds also saw net selling of 330 million pounds in August, marking a reversal of fortunes after adding 4.8 billion pounds over the first seven months of the year against a backdrop of rising interest rates.
“Fear was a big motivator in August,” said Edward Glyn, head of global markets at Calastone. “With savings interest rates and yields on safe-haven money market funds at their highest level since 2007, it doesn’t take much to cause a rout.”
Money market funds once again outperformed, adding 673 million pounds – the second highest monthly inflows on record.
Asset managers, which had previously cashed in on a surge in demand for ESG funds, should take note of the developing sell-off, said Calastone’s Glyn.
“The move out of ESG funds has gathered pace in a remarkable reversal after the boom in recent years. Four months of outflows signals a new trend emerging that fund houses will have to work hard to counteract.”
($1 = 0.7916 pounds)
(Reporting by Iain Withers, Editing by Tomasz Janowski)
ESG stands for Environmental, Social, and Governance. It refers to the three central factors used to measure the sustainability and societal impact of an investment in a company or business.
Equity funds are mutual funds or exchange-traded funds that invest primarily in stocks. They aim to provide capital growth over the long term by investing in a diversified portfolio of equities.
Fixed income refers to investments that provide returns in the form of regular, or fixed, interest payments and the return of principal at maturity. Common examples include bonds and treasury bills.
Explore more articles in the Top Stories category
