UK equity funds see USD4.7bn outflows in two weeks after Brexit

In the two weeks between the EU referendum and 6 July, UK equity funds saw outflows of $4.7bn, according to Societe Generale and data provider EPFR Global.

This was the highest level of outflows since at least 2007. SocGen said that while the Brexit vote clearly acted as a trigger, net flows turned negative from 16 March, some three months ahead of the vote.

Since the referendum, assets under management at UK funds that supply data to EPFR fell by 9.1% to $450bn, with losses concentrated in equity and money market funds, while bond fund AUM were pretty much flat.

“These figures include the impact of lower asset prices, weaker sterling and net outflows. Nevertheless, the data should be viewed with caution and as only a partial estimate of the damage to the fund industry. A number of funds report only on a monthly basis, hence we will have to wait for the full picture.

“Also, these numbers do not capture the consequences of last week’s property fund suspensions or assets held by institutional investors that are beyond the scope of the EPFR dataset.”

SocGen said that even with confirmation of Theresa May as Prime Minister, the conditions and consequences of Brexit remain unclear.

The bank maintained its 1.20-1.25 target for GBP/USD and recommended staying tactically away from banks.

“We stick to a strong negative bias on the UK domestic economy by being short FTSE250/long FTSE 100.”