Emerging market equities attract inflows as investors flee developed stock funds

September marked a continued retreat from equity investments, highlighted by UK investors pulling £858 million from equity funds, the fifteenth month of outflows in the last sixteen, and a cumulative £5.4 billion withdrawn from equities since the start of the year. Global equity funds also recorded a net outflow of £410 million. Amid this broad sell-off, emerging market equities stood out, receiving £133 million of inflows as investors sought diversification away from concentrated developed markets.

Fixed-income assets benefited from the shift, with bond funds attracting £655 million, driven largely by high-yield funds that added £421 million. Analysts linked the move to nervousness over high stock valuations, rising bond yields, and ongoing geopolitical and inflation concerns. The data suggest a preference for lower-risk assets despite resilient market performance.