The average allocation to the UK in global equity funds rose to 8.47% by the end of April this year, signalling the highest weighting in a year and a significant 61 basis point (bp) increase on October 2016.
Consumer stocks have been the biggest contributors to the funds’ new overweight positions, as well as holdings in the financial, industrial and energy sectors.
The research, conducted by Copley Fund Research, examined the allocation of 156 funds with a combined value of $330bn (£257bn, €295bn) against the MSCI All Country World Index.
The report, produced by Steven Holder, found: “Although price action has played a part, other measures show that funds are actively increasing their UK allocations.
“The average holding relative to the benchmark MSCI AC World Index has risen to a six-year high of 2.56% overweight.
“In addition, the percentage of funds who are overweight UK stocks has risen from 57% to 63% in just under six months.”
Positive cash flows of $314m have been allocated to UK stocks since October 2016 and the UK now stands as the largest overweight holding compared to other nations.
Global equity funds have tended to move underweight the US, where the average fund is 5.3% underweight, Japan and Australia in favour of the Netherlands and France.
The research found significant weight increases towards the UK in the Jupiter Global Fund, up 25.25%, the Oakmark Global Select Fund (9.55%) and the Carnegie Worldwide Global Fund (5.31%) played a big part in the rise in UK exposures since September last year.
