Brexit wipes €36bn from value of UK fund assets

The value of UK funds’ assets under management has dropped by more than $40bn (€36bn) in the three weeks since Britain’s vote to leave the EU, largely due to the plunge in the pound, fund flows data company EPFR said yesterday.

Losses were concentrated in equity and money market funds, and reflected the combined impact of lower asset prices, net outflows, and the fall in sterling’s exchange rate since the June 23 referendum on EU membership.

The fall to $468bn of assets under management from $510bn before the vote marks a drop of 8.2%, roughly the scale of the depreciation in sterling over the period. EPFR said roughly four-fifths of the decline in assets was due to the currency fall.

Britain’s benchmark Ftse 100 is 5% higher than it was on June 23, bouncing back sharply from the initial fall, while the broader Ftse 250 index is still 4% lower.

The Ftse 100 is influenced more by global factors, with around 70% of earnings derived from overseas, so benefiting from the fall in sterling.

The Ftse 250 is much more sensitive to the domestic economy, which most analysts expect to weaken after the Brexit vote.

UK property funds have been hit particularly hard since the referendum. More than £18bn in property funds aimed at retail investors was frozen last week and the value of many funds was cut following a tide of redemption requests.

The broad recovery in British equity markets from the Brexit troughs, however, has helped lift UK funds’ total assets under management up from the low of $440bn on June 27, EPFR said.

Despite the rebound in UK stocks, Societe Generale this week warned that the outlook for UK assets remains challenging.

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