Outflows from property funds increased in October, according to the latest Fund Flow Index from Calastone.
Investors withdrew a net £45m from their property fund holdings during the month, up by more than half from September’s £29.7m net selling.
Sharply higher sell orders were the driver of the increased outflows, which Calastone said was in contrast with the typical monthly pattern it sees in property funds, where net outflows are driven more by changing buying appetite.
Investors placed £76m of sell instructions in October, up from £55m in September. Buy orders were also up, however, rising to £31m from £25m in September. The net effect was a sharp increase in outflows.
Calastone said October’s trading among property funds was in keeping with the pattern shown in equity funds across its UK fund network. Investors withdrew a record £2.7bn from equity funds during the month, with every equity sector seeing outflows. Again, this was driven by a sharp uptick in sell orders (up 36% month on month) to a record level, with buy orders also rising.
Edward Glyn, head of global markets at Calastone, said: “The key driver of equity fund trading was a desire to crystallise capital gains ahead of the Budget, owing to the well-trailed news that capital gains tax was going to see a big hike. Equity funds saw the same pattern as property funds – with sharply higher selling as well as increased buying.
“Sell orders dropped 40% on Budget day, when the tax changes were both announced and came into effect, clearly connecting investor behaviour to the government’s announcement.
He added: “In the property fund sector, the picture is a little less clear because it continues to suffer structural outflows on a monthly basis. Nevertheless, higher net outflows in October and the particular change in sell and buy orders show that pre-Budget evasive action added a short-term boost to the long-term picture of capital withdrawal.”
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