UK Investors Shift from Equities to Safe Havens

LONDON (Reuters) – In August, Britain saw a notable shift in investor behavior, according to data from fund network Calastone.

Key Highlights:

• Decreased Equity Investment: Investors reduced their bets on equities, with net inflows falling by three quarters compared to July, totaling £545 million ($714 million) – marking the lowest level since November. Despite this drop, it was still the 10th consecutive month of inflows into equities.

• Market Turbulence: Early in the month, global stocks faced heavy selling due to weak U.S. economic data and an unexpected rate hike by the Bank of Japan. Despite this, the markets rebounded to post a fourth consecutive month of gains.

• Quick Recovery: The initial outflows were mainly in the first three days of August, with UK investors withdrawing £206 million. However, inflows returned to subdued levels as the market stabilized.

• Investor Caution: Edward Glyn, head of global markets at Calastone, noted that “Investors flinched when global markets convulsed in early August,” reflecting the market’s unpredictable nature.

• Increased Safe Haven Investment: In light of recent volatility, investors allocated £593 million towards money market funds, marking the highest investment in such funds for a year.

• Bond Fund Selling: August also saw significant selling in bond funds, with UK investors pulling a net £516 million, marking the third worst month recorded by Calastone.

Note: Exchange rate used – $1 = 0.7632 pounds.