In an unprecedented trend, UK investors are channeling funds into US stocks at the swiftest rate in nine years, with over £2.5 billion flowing into North American equity funds in February. This surge, led by the tech sector, has catapulted American markets to record highs, fueled by excitement surrounding artificial intelligence and expectations of a potential Federal Reserve interest rate cut.
Calastone, a fund network, reported this as the most substantial monthly inflow into US stocks in its nine-year record. The rally, particularly in technology stocks, has propelled the US S&P 500 and Nasdaq indices to surpass their late 2021 and early 2022 peaks.
Edward Glyn, Head of Global Markets at Calastone, emphasized that “Risk is back on with a vengeance,” highlighting the enthusiastic return of investors to the US stock market. Meanwhile, UK investors exhibit a lack of enthusiasm for domestic stocks, with £633 million flowing out of UK funds in February, signaling the potential for 2024 to be the fourth consecutive year of outflows.
Despite the strong preference for US stocks, investors continued to favor money market funds, witnessing an influx of £78 million, albeit below the 2023 monthly average. Bond funds also experienced robust growth, attracting £329 million, marking their best month since June 2023.
While Calastone’s data primarily reflects retail investor decisions, it offers valuable insights into UK financial flows and investor sentiment.
