2.
Over
the
last
two
years
there
have
only
been
two
months
which
have
seen
inflows;

3.
Net
assets
have
increased
since
2007.
However,
this
is
down
to
the
natural
increase
in
the
value
of
the
underlying
stocks.
Outflows
have
been
overwhelmingly
negative
over
this
period,
with
asset
values
actually
peaking
in
August
of
2021
and
since
declining
materially.

Why
is
This
Happening?

One
major
factor
is
pension
funds.
For
years
UK-based
pension
funds
invested
a
disproportionate
amount
of
assets
in
UK
equities,
given
their
geographical
home-country
bias,
as
well
as
the
reputation
of
UK
companies
for
paying
dividends.
Between
1997
and
2001,
however,
UK
pension
funds
reduced
their
exposure
to
UK
equities
from
more
than
half
of
their
assets,
to
just
6%.
That’s
according
to
the
think
tank
New
Financial. 

Such
a
huge
fall
begs
the
question:
was
the
original
allocation
too
high,
or
is
the
new
allocation
too
low?
Well,
as
per
the

Morningstar
Global
Markets

index,
the
UK
represents
just
over
4%
of
the
global
equity
market,
so
it
seems
as
though
the
current
allocation
by
pension
funds
is
still
generous.

Withdrawals
by
pension
funds
are
clearly
the
main
explanatory
factor
here.
But
there
are
others.
The
ageing
of
equities
in
the
FTSE
100,
and
the
lack
of
new
entrants,
particularly
in
the
tech
and
biotech
space,
have
made
the
index
less
attractive
to
growth
investors.

Brexit
and
a
lack
of
a
stable
government
has
also
hurt
us.
Why
would
investors
put
more
money
into
a
country
that
has
gone
through
five
prime
ministers
over
the
past
eight
years,
and
where
there
is
a
lack
of
clarity
for
businesses
in
the
UK
and
trading
with
the
EU?

What
Can
Be
Done?

The
reversal
of
pension
outflows
won’t
happen.
That
ship
has
sailed.
There
are
no
quick
fixes.

A
stable
government,
be
it
a
Labour,
Conservative,
or
coalition project,
will
help
at
the
margins,
as
would
a
simplification
of
the
listing
process
for
companies.
The
latter
could
certainly
help
attract
new
firms
to
the
main
indices.

Really,
however,
the
long-term
strategy
should
be
focused
on
helping
home-grown
start-ups
in
growth
areas
like
tech
and
medtech,
and
supporting
them
from
their
earliest
moments
through
to
listing
and
capital
raising.
This,
however,
takes
many
years –
and
capital.

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