An estimated £718m was pulled from UK equities by retail investors during July, new figures published by the Investment Association (IA) have shown.

Equities dominated the outflows the IA recorded in July, with investors also taking £819m out of global funds and £270m from North America funds, to total £1.8bn in outflows for the month.

Across all funds, UK retail investors pulled £752m from funds during July, reversing the inflows of £208m in June.

The IA said the continued selling suggests investors are taking a “more cautious stance” toward UK equities, potentially in anticipation of the upcoming Budget – which was confirmed yesterday for Wednesday 26 November – and its implications for taxation, spending, and broader economic growth.

Ongoing global trade tensions and the longer-term economic implications of higher tariffs may be prompting investors to take risk off the table, the IA also stated.

Director, market insight and fund sectors at the IA, Miranda Seath, commented that widening deficits among Governments in the UK, Europe, and the US would be “firmly in the spotlight” in September, and that bond investors were pushing up long-term borrowing costs by demanding a higher risk premium on Government bonds.

“In the UK, as the Chancellor’s fiscal headroom evaporates, speculation about tax changes is mounting ahead of this year’s Autumn Budget,” she added. “In the very near term in the UK, investors have seen a recent rate cut, pushing down rates on cash savings and rising inflation.

“This could push more money into investment funds. The steep rise in the value of physical gold suggests that institutional investors perceive that risk is rising- investors buy gold to hedge risk. If we follow this logic through to funds, it suggests that investors could de-risk as we head towards a late November Budget.”

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