LONDON (15 March 2024) – In response to Chancellor Jeremy Hunt’s introduction of the Brit ISA, ISS Market Intelligence (ISS MI), a leading global provider of data, analytics, insights, examines the latest trends in investor behaviour in the UK and Europe.
The Brit ISA policy, aimed at directing investments towards UK companies, comes at a time when data indicates a shifting landscape in investor preferences. Analysis conducted by ISS MI reveals a notable decrease in demand for domestic equity funds not only in the UK but also in key European markets such as Germany and France.
Statistics show that the UK, Germany, and France are all experiencing net outflows from domestic equity funds, highlighting a broader trend away from home-based investments. Moreover, performance does not emerge as a primary driver of these outflows, indicating deeper shifts in investor sentiment and strategy.
European investors are increasingly accessing foreign equity markets through cross-border funds domiciled in Ireland and Luxembourg, showcasing a growing appetite for global diversification.
Of note is the UK, which has witnessed the largest decline in Assets Under Management (AUM) in domestic equity funds. Changing demands from UK investors have caused domestic equity fund AUM to drop from 39% of total equity fund AUM in 2018, to 25% in 2023. This shift, also seen across Europe, underlines a significant change in investment behaviour.
“European investors and fund selectors are increasingly investing abroad in search of equity returns and are leaving their home bias at home.” said EMEA Research Lead, Benjamin Reed-Hurwitz.
ISS MI provides our clients with comprehensive data, analytics, and insights to empower informed decision-making.
For further information visit https://insights.issgovernance.com/posts/demand-for-home-based-investments-declining-across-europe/ or contact mi_emeasales@issmarketintelligence.com.
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