IA data reveals investors pulled £2.4bn from equity funds in September
Kate Marshall, lead investment analyst, Hargreaves Lansdown: “While optimism over the summer months saw inflows into equity funds, it’s not a huge surprise to see investors pulling money back out in September, ahead of Labour’s first Budget.
During the first month of Autumn, investors turned their focus to the impending Budget, and the almost inevitable rises in Capital Gains Tax (CGT). Not wanting to get caught out by higher tax bills, investors locked in profits. For some, this felt the right call given CGT was hiked from 20% to 24%, while the lower rate increased from 10% to 18%.
This also meant UK funds were the some of the least popular as a result. The worst-selling Investment Association sector in September 2024 was UK All Companies, which experienced outflows of £581m. UK Smaller Companies funds also experienced some of the worst outflows, reflecting the weakening sentiment towards the UK economy. Smaller companies tend to be more reliant on the health of their home economy for their success.
The US once again bucked the trend though. Funds investing in North America saw net inflows of £146m in September and was the only equity sector in the top five best-selling Investment Association sectors for September. HL investors reflected this trend, with two US index funds appearing in the top 10 most bought funds in the month.
Elsewhere, bonds proved popular, with investors remaining attracted to the relatively higher rates on offer across both corporate and government bonds. With rates not falling as much as expected at the start of this year, rates still look attractive for those seeking income in their portfolio.
HL data shows that aside from the US, global, India and renewables funds were most popular. Global funds have a decent slug invested in the US, but they also provide important diversification across all regions across the world. The new Labour government is also seemingly taking plans to move away from oil and gas and build a cleaner power system more seriously. Investors have taken this as an opportunity to add to their renewables exposure. This is a specialist area though, and we think funds and investment trusts investing in a specific sector should usually only form a small part of a well-diversified investment portfolio.”
HL data
| Top Funds, September 2024 (HL clients, net buys) |
| UBS S&P 500 Index |
| Jupiter India |
| Fidelity Index World |
| Legal & General US Index |
| Legal & General International Index Trust |
| Legal & General Global Technology Index Trust |
| Vanguard FTSE Global All Cap Index |
| Vanguard LifeStrategy 100% Equity |
| Rathbone Global Opportunities |
| Fidelity Global Dividend |
| Top Investment Trusts, September 2024 (HL clients, net buys) |
| BlackRock World Mining Trust plc Ordinary 5p |
| Greencoat UK Wind plc Ordinary 1p |
| JPMorgan Global Growth & Income plc Ordinary 5p |
| City Of London Investment Trust Ordinary 25p Shares |
| Supermarket Income REIT plc Ord GBP0.01 |
| Alliance Trust plc Ordinary 2.5p Shares |
| Merchants Trust plc Ordinary 25p |
| HG Capital Trust plc ORD GBP0.025 |
| Polar Capital Global Healthcare Trust plc Ordinary 25p Shares |
| NextEnergy Solar Fund Ltd Ordinary NPV |
