UK Investors Migrate from LSE and Look at US Equity Market

Investors from the UK have pumped a record funds of $7.24 billion into the US equity market in the first quarter of this year, which was more than three times the previous best quarter in the fourth quarter of Q4 2020 ($2.23 billion).

North American funds were by far the biggest beneficiary, attracting $2.24 billion of new capital. In the four months since December 2023, the UK investors have added more cash to North American equity funds than they have in the previous nine years combined ($8.47 billion as against $8.08 billion), according to latest data from the UK-based Calastone, the global funds network.

Furthermore, the UK investors also continued their stampede into equity funds in March this year, the latest Fund Flow Index (FFI) from Calastone revealed. These investors added a net $2.91 billion to their holdings and ensured Q1 of 2024 was a record for equity-fund inflows, totalling $8.82 billion since January.

UK Markets Hard Hit

Edward Glyn, Head of Global Markets at Calastone, said that global equity markets have surged since the end of October. Japan, the US and Europe have led the charge, all up by more than a quarter and leaving the UK in the dust – the UK’s top 100 has eked out just 8.6% over the same period.

“The UK equities are certainly cheap, but investors worry where the growth is going to come from to drive earnings higher. Add a relentless narrative of gloom about the prospects for the London stock market and it’s hard to persuade anyone to hold UK-focused funds. Meanwhile the US earnings recession is over – profits are once again on the up and that seems to be the main catalyst driving fund inflows and higher share prices,” Glyn said.

Among other asset classes, fixed income fund inflows accelerated to their best level since June 2023. Investors added a net $582.25 million to their holdings. Mixed asset funds and the property sector saw outflows continue.

Edward Glyn added: “Bond markets have had a rough start to 2024 as hopes for rate cuts were pushed further out into the future. Yields have risen to levels last seen in November (which pushes prices lower) and are proving increasingly attractive to investors keen to lock into relatively high levels of income and who believe there is the prospect of capital gains to come when rates fall.”