Key Points

  • British investors pulled a record 503 million pounds from equity funds in June
  • The money was directed to money market funds.
  • Reports from Calastone show that the investors now prefer Money market funds, a place of relative safety and yield, as the U.K. economy 

Investors in the U.K. have flocked into money market funds, according to a June report from Calastone, in the second-highest move of its kind in the country’s history. The move comes when the U.K. economy is in distress due to the rising inflation rate dragging costs of living up with it.

The U.K. Investors pull $842 million from equity funds in favor of money market funds

Figures from Calastone show that U.K. investors are walking away from Equity funds, with body funds raising the highest numbers, 880 million pounds of new money in June. Another record 503 million pounds went into money market funds.

The money that went into these markets was heavily transferred from other asset types like equity, missed assets, and property funds. The June report indicates that investors lean heavily toward fixed-income and money markets as the global economy endures high inflation rates.

The report also indicated that “strong outflows” were seen in the U.K., North America, and ESG funds in equity sectors. The firm also noted that Technology funds benefitted from the A.I. hype. 

June’s figures are but a representation of the global migration of assets from Equity funds over the past 12 months. In the time frame, investors pulled 3.6 billion pounds from equity funds while pumping 7.9 billion pounds into fixed income. 

Edward Glyn, head of global markets at Calastone, noted: “Fixed-income funds and their money market cousins have not looked so attractive since before the global financial crisis. At the same time, recession fears are stalking equity and property markets – investors are nervous. The result is a flight to safety.”

He added that money market funds currently offer income at a rate of 5% or more in a relatively lower risk, with fixed income funds offering the chance to lock into the “highest yields in years.”

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