London's equity market staged a surprise comeback in May, attracting a net inflow of investor capital for the first time since November 2024. This positive development for UK stocks counters the global trend observed by Calastone, which shows investors shunning equities in favour of bonds and mixed-asset holdings.
The shift towards mixed-asset funds was particularly pronounced, with demand reaching 'near record' levels during May. This suggests a cautious sentiment among investors, who are perhaps seeking diversification and a balance between growth and stability in their portfolios amid ongoing economic uncertainties. The preference for bonds also underscores a desire for lower-risk assets, potentially anticipating future interest rate movements or broader market volatility.
The FTSE 100 index's strong performance throughout May may have enticed some investors back into the domestic market, perceiving value or growth opportunities that were perhaps overlooked in previous months. This coincided with the first monthly net inflow of investor capital since November 2024, highlighting a potential turning point or renewed confidence in the UK market's prospects.
The data from Calastone provides insight into investor behaviour, illustrating a nuanced environment where global caution coexists with targeted opportunities. The sustained demand for mixed-asset funds suggests that while UK equities may be regaining favour, a broad-based appetite for higher-risk assets has yet to fully materialise across the investment landscape.