Global equities saw their first outflows in six months in September, according to the latest data from the Investment Association.
Overall, there were £3.4bn of outlaws in the month, with investors pulling £2.4bn from equity funds, up from the £424mn outflow in August.
The trade body put this down to uncertainty ahead of October’s budget.
Miranda Seath, director of market insight and fund sectors at the association, said: “In September, investors turned their focus towards the impending Budget as speculation grew around how much the government would need to borrow and the tough decisions they would take on tax.
“It was clear that capital gains tax rises were almost inevitable, and this looks to be a contributing factor to a surge in outflows across equities, which has upended the tentative recovery of flows into the asset class in previous months.”
Global equities were particularly impacted and saw their first outflow in six months, while outflows from UK equities remained consistent with previous months.
However, there was a rise in outflows from the UK Smaller Companies sector. Seath said this could suggest worsening investor sentiment on the outlook for the UK economy.
Seath added: “In the longer term, and with the budget now in the rear-view mirror, there does appear to be some clarity for investors, but only if the chancellor is able to stick to her commitment to setting long-term and stable fiscal policy, and achieve growth, without raising taxes further.
“Looking ahead to the final quarter of 2024, Trump’s US election victory will be a more significant factor in the fortunes of markets around the world and investors will be watching closely.”
tara.o'connor@ft.com
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