British equity funds experienced their most challenging year on record compared to global counterparts, highlighting London’s diminishing influence in global financial markets. The latest data from Calastone reveals investors withdrew a staggering £9.6 billion from UK funds in 2024, creating a stark contrast to the £27.2 billion inflows observed in equity funds globally.
The exodus marks the ninth consecutive year of net outflows, and whilst slightly less severe than the £12.1 billion witnessed in 2023, it represents the highest level of selling relative to other global market funds since Calastone began tracking in 2015. During this period, North American funds attracted £11.9 billion, whilst globally mandated funds secured an impressive £19.5 billion.
Returns from London-listed companies significantly trailed their New York counterparts, with the FTSE 100 managing a modest 6 per cent rise compared to the S&P 500’s robust 24 per cent gain, largely driven by the ‘Magnificent Seven’ technology companies.
Edward Glyn, Calastone’s head of global markets, noted investors appear to be capitulating despite attractive UK equity valuations, abandoning hope for a long-anticipated market re-rating. The situation has been exacerbated by numerous private equity firms and overseas investors launching takeover bids, capitalising on the depressed valuations of UK companies.
The London Stock Exchange’s IPO market remained notably subdued, raising merely £700 million from eight listings in 2024, down from £800 million across eleven listings in 2023. This anaemic performance contrasts sharply with Continental European exchanges, where 57 flotations generated €14.6 billion.
The Financial Conduct Authority’s significant overhaul of listing rules, announced in July, represents the most substantial change in three decades, aiming to enhance London’s appeal and reverse the ongoing exodus of capital from the City.
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