Property funds saw a surprise inflow in August, according to the latest Fund Flow Index from Calastone.
Investors added a net £52m to their holdings during the month with the uptick created by a smaller volume of sell orders – at £122m, the third lowest on Calastone’s 12-year record – and a jump in buy orders – at £174m, the best since May 2024.
Edward Glyn, head of global markets at Calastone said: “Investors are willing to diversify away from equity funds – but they are not simply dumping everything into bonds. Property offers something slightly different: yields have reset at more attractive levels, rental income has remained reasonably resilient, and valuations have already taken much of the pain from higher rates. Property looks much more attractive in relative terms when equities are at record highs.
“The key question is whether August marks a genuine turn in sentiment toward UK property funds, or just a small reallocation after years of capitulation. One month is not a trend. Years of redemptions have significantly reduced the pool of investors still looking to sell, so even modest buying can now push net flows positive. September and October will show whether August marks the beginning of a genuine rehabilitation of property funds or simply a pause in their long decline.”
