Global funds transaction network Calastone has launched an index measuring flows into UK-domiciled open-ended investment funds using its platform’s real-time technology.
Calastone’s Fund Flow Index (FFI) displays net inflow and outflow of capital, relative to the total value of units bought and sold in funds, with a score of between 0 and 100.
A reading of 100 would mean all activity was buying, while a reading of 0 would mean all activity was selling.
The first edition of the report looks at the past four years of activity in the UK open-ended investment funds market, analysing the impact of various key market events.
The report will be published on a monthly basis from now on, while occasionally delving deeper into some of the key themes driving investment decisions in the UK.
For example, Calaton’s first report using the new scale shows that the Brexit Referendum in 2016 and the following global market turmoil pushed the FFI to a record low of 47.8.
Meanwhile, the record high delivered in the last four years was seen in the market recovery from a highly volatile January 2015, when the FFI was driven to 59.8 in July of that year.
In 2018, the FFI has recorded lower inflows, amid “rising risk aversion and increasing appetite to move funds offshore”, according to the report.
The first report shows FFI at 51.6 in October – its lowest since the second quarter of 2016 – falling from 54.2 in the third quarter of 2018.
FFI, which can also be split by asset class, shows outflows in bond funds and ‘other’ funds of £338m and £154m respectively.
Meanwhile, mixed asset funds saw the highest inflows at around £1bn, followed by equity and real estate funds which pulled in £198m and £151m each respectively.
The report said: “Net new capital has continued to flow into funds, but at a slower rate than last year, and with increasing caution.”
“Year-to-date, investors have committed a net £29.9bn to funds, a fifth lower year-on-year. The slowdown has intensified recently: in the last five months, inflows have been half the level seen in the same period of 2017. October was the weakest of all. It saw inflows a touch under £1.1bn on very high two-trading volumes, comfortably the lowest level since late 2016. Not only has 2018 seen slower inflows but investors have also become much more risk-averse.”
This article was first published on Investment Week