A balancing act to lure inflows into UK equities
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A BALANCING ACT TO LURE INFLOWS INTO UK EQUITIES
The UK government is aiming to sell shares in lender Natwest NWG.L this summer, as part of a wider push to spur inflows into beleaguered UK equities, which despite smashing a record last month, have suffered increasing outflows in recent years.
In a UK outlook piece on Thursday, Charles Hall, head of research at Peel Hunt, highlights an ongoing theme of globalisation in wealth management portfolios, which has sucked money out of UK equities, driving a vicious circle of depressed valuations and more outflows.
He says it is ironic that private bank Coutts, which is owned by Natwest, is at the same time reducing fund allocations to the UK.
On Coutts' website the bank says it is reducing the amount of UK shares and investment-grade bonds it holds within its funds in favour of a more global approach, effective from the start of July.
According to Peel Hunt, the funds involved have a combined market value of 9.8 billion pounds, split 62% equities and 38% bonds.
"The UK represented 33% of the equity portfolio at the last reported numbers, or 22% of total AUM. Taking the shifts in the portfolio, this will reduce to just 2%, with an overall outflow of 1.96 billion pounds from the UK," Hall says.
He cites the fact that 8 billion pounds was pulled from UK equity funds in the whole of 2023, according to fund network Calastone.
When contacted by Reuters, a Coutts spokesperson said the bank retains significant investment in the UK and its investment strategy is to achieve the best returns for its clients in the most attractive markets.
"We closely follow the performance of all markets in line with our individual client needs and our House Views are subject to constant review," the spokesperson said.
(Lucy Raitano)
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