When discussing the UK market with allocators, we tend to hear two things: it’s unloved and it's under-owned.

The DFMs we follow predominantly fall into two camps. There are those who see such valuations as an attractive entry point and share prices ripe for a revival, and there are those who view the idea of a home bias as nonsense and a drag on portfolios. 

What we find hard to reconcile is how allocators’ bullishness around the idea of good value has not yet – or indeed ever – translated into action. 

New data from Morningstar Direct tells us large-cap UK equity funds experienced £2.4bn of net outflows in May 2024 alone – with over £12bn being pulled over the year. 

Those numbers come in the wake of the FTSE 100 hitting several all-time highs this year. 

This is all the more concerning given the country seems to be missing out on an enormous amount of renewed interest in equities across most other regions.

The stats found Europe-domiciled funds experienced €54bn of net inflows in May 2024 – the best result this year – signalling there’s plenty of money around but the UK is getting none of it.

We recently spoke with Andrew Summers, the new chief investment officer at Omnis, who told us he had tapered down their home bias upon his arrival in December. 

He said most of the world’s best companies are no longer listed here and tapering would reduce the single country risk from investing in this particular market. 

Yet a mood of renewed optimism has circulated among DFMs of late – a recent catchup with Hawksmoor’s CIO Ben Conway revealed he’s ‘frothing at the mouth’ about opportunities on home shores. 

But at the topline, our allocators’ average weighting to the UK has been decreasing over the years to just 13 per cent, and until we see some kind of material increase reflected in portfolios then we’re inclined to remain slightly sceptical of sentiment.