Investors in the UK have shown a strong preference for global equity funds over regionally focused ones, according to fund flow data from Calastone.
Since 2015, global funds have attracted net inflows of £51.3 billion, while all other geographical categories combined have gained only £909 million in new capital. Calastone's data reveals that net outflows occurred in nine out of the past 51 months for global funds, compared to 51 months for all other regional strategies combined. Excluding UK-focused funds, which experienced significant outflows, regionally focused categories have garnered less than one-third of the capital inflows seen by global funds.
The surge in global fund inflows has been attributed to environmental, social, and governance (ESG) funds, which contributed £21.9 billion to international funds' inflows since 2015 and £13.6 billion since July 2021. In contrast, funds investing in UK companies used to surpass global funds' value a decade ago, but this trend shifted after October 2017. The latest data from May 2023 indicates that global funds, at £166.4 billion, have overtaken UK-focused funds at £141.1 billion in terms of assets under management.
Edward Glyn, the Head of Global Markets at Calastone, believes that the trend of favoring global equities is likely to continue. He noted that many successful companies operate globally, making their listing location immaterial. Glyn emphasized that while certain regions may experience temporary inflows, the overall trend indicates that investors are content with setting their allocation preference to global equities, relying on regular contributions to maintain their investment strategy.
By fLEXI tEAM