UK investors withdrew a record £3.6 billion from equity funds during the third quarter, marking the worst three-month run for stock market investments since Calastone began compiling data in 2015.
The figures highlight growing caution among investors who have been spooked by high valuations and global uncertainty, prompting a decisive move into the relative safety of bonds and cash.
Edward Glyn, head of global markets at Calastone, said it was “really unusual” to see markets at record highs while investors were “moving decisively for the exits across such a broad range of funds”.
The exodus came despite both the FTSE 100 and S&P 500 posting gains of nearly 15 per cent since the start of the year. Much of that growth has been driven by a small cluster of large technology stocks that have soared on the back of artificial intelligence optimism.
Glyn warned that “some parts of the US market in particular do seem to be exhibiting signs of irrational bubble behaviour”, adding that share prices can “defy fundamentals for a long time — and that is costly for investors on the sidelines.”
UK equity funds saw the steepest losses in September, suffering net outflows of £692 million. Global funds recorded a fourth consecutive month of withdrawals, shedding just over £200 million, while North American funds lost £146 million.
Overall, investors have added just £126 million to equity funds so far this year, a sharp fall from £22.7 billion in net inflows over the same period last year.
Fixed-income and money-market funds were the biggest beneficiaries of the shift in sentiment. These safer assets absorbed £895 million in new money during September, including £610 million funnelled into bond funds.
Analysts say the trend reflects a broader flight to safety as investors seek protection from market volatility, stubborn inflation and uncertainty about the sustainability of global equity valuations.
Read more:
UK investors withdraw record £3.6bn from shares as market jitters drive shift to bonds and cash
