The huge pendulum swing among investors follows October’s record outflows, which took place before the Autumn Budget, when fears of a capital gains tax (CGT) hike brewed among the industry – which proved to be true.
But in November, the inflows matched the pre-Budget outflows (£2.71bn) to the tune of £3.06bn, according to Calastone’s Fund Flow Index.
The UK market saw a particular uptick, with November marking its first month of inflows for three-and-a-half years.
Investors deposited a net £317m to UK funds last month, after withdrawing a hefty £25.33bn in the previous 41-month period.
The huge upswing was put down to investors putting their funds back into other ventures after profits were withdrawn the month before.
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While UK markets felt the benefit of the shift, the biggest winners were in the global and North American markets, which saw £1.22bn and £848m pumped into them respectively.
The emerging markets also did well, with £426m of investments heading into the sector.
Elsewhere, European funds also had inflows, but Asia-Pacific and specialist sector funds struggled, but the outflows were less significant than in October.
‘Investors keen not to be out of the market’
Edward Glyn, head of global markets at Calastone, said: “The biggest tax-raising Budget since 1993 prompted a scramble to shield profits on funds from higher levies. But investors were keen not to be out of the market for long.
“Almost half of October’s outflows were poured back into equity funds in the first week of November, further evidence that these record flows were all about minimising tax bills. Time will tell, but the inflow to UK-focused funds is therefore likely to be a hiatus rather than marking a break in the trend.
“There is no major catalyst on the immediate horizon to prompt a wholesale resurgence of interest in the much unloved UK stock market.”
Glyn added: “Bond yields fell during the second half of November after surging from their mid-September low point. Outflows from fixed income funds in August and September reflected profit-taking as bond yields came down on expectations of rapid rate cuts (lower bond yields mean higher bond prices).
“Yields rose again on fears that inflationary pressures were building once more. These higher yields have tempted investors back into fixed-income funds over the last few weeks. Those who added to their fixed-income holdings in the first half of November are already enjoying capital gains.”
