Politicians may be debating future relations with Europe, but it seems that investors have already made up their minds. In the second half of 2018, net retail outflows from European equity funds available to UK investors hit £1.4bn, as MSCI Europe ex UK index fell 10 per cent and Europe became the worst performing major market of 2018. This was in stark contrast to positivity at the start of last year when European equities were tipped to deliver stellar returns, and the first six months of 2018 when European equity funds available to UK investors made net retail sales of £308m.
The high outflows from Europe funds in the second half of 2018 were in part due to general bearishness on all equities, but negative feelings on Europe were particularly strong, with £400m withdrawn from European equity funds in December alone, as chart 1 shows.
