Brexit vote uncertainty impacting US flows into European equities, Goldman Sachs says

The pall of uncertainty surrounding UK's future tenure in the European Union is impacting US flows into European equities, says Goldman Sachs Global Investment Research.

"We do find that flows from US investors into European equities (measured by AMG/Lipper mutual fund data which includes ETFs) are very sensitive to policy uncertainty," the research unit said.

Britons are due to vote on the UK's membership of the EU on 23 June. Polls so far have been mixed, some suggesting a Brexit outcome and others a Bremain.

The cable has been buffeted by the political and economic uncertainty caused by the two protagonist camps in the much-debated EU in-out vote.

Goldman Sachs Global Investment Research cited a UK Policy Uncertainty index that had increased markedly in recent months.

"The outflows from US investors seem to have coincided closely with this shift," it said in a research note.

"Over the longer run, we think UK Policy Uncertainty specifically is less strong an indicator for US flows than the aggregate European uncertainty.

"For example, UK Policy Uncertainty and flows from US investors were poorly correlated in 2012-2015 when US investors were more focused elsewhere in Europe."

Goldman Sachs Global Investment Research further added that should the referendum outcome be to remain in the EU, "we expect to see policy uncertainty conditions in the UK lessen, and this would be consistent with a modest pick-up in flows into Europe."