Property fund outflows finally slow

Property fund outflows slowed in May, according to the latest Fund Flow Index from Calastone. Investors withdrew a net £22.7m, the best result for the sector since September 2023 and the third consecutive month to see outflows moderate. May’s improvement was driven by a sharp drop in sell orders, which were more than two-fifths lower than the January to April average, said Calastone. Buy orders also dropped modestly. For every £1 of selling in May, buy orders were worth 61p. This compares to 40p of buying for every £1 of selling over the last year. Edward Glyn, head of global markets at Calastone, said: “Property funds have largely decoupled from what is going on in other asset classes. This is not because property itself is immune to developments in the bond markets or the real economy, but rather because of the structural issues besetting the open-ended property fund sector. “Nevertheless, the slowing trend in outflows in recent months suggests investors are getting less negative on property as an asset class.” He added: “The exact timing of an interest rate cut is the hottest topic in finance right now but whether it is in August or November, the fact that cuts are on the agenda is good for property as the asset class is very rate sensitive. Investors buying into property now can lock into high yields and are hoping for capital gains too when the cycle turns.” Photo by Image Source/REX/Shutterstock (482286a)