As the United Kingdom continues its Brexit battle, exchange-traded fund (ETF) investors are taking notice and withdrawing their investments in European equities. According to data compiled by Bloomberg, the largest Europe ETF (NYSE: VGK) recently suffered its largest daily withdrawal in over 10 months and lost almost $177 million in September alone. This is particularly noteworthy because more than 23% of the ETF’s holdings are British companies, which are facing uncertainty about the U.K.’s future relationship with the European Union.
In order to gain more insight on investors exiting from European ETFs, Bloomberg recently spoke with Delegate Advisors Director of Portfolio Management Dunkin Allison. Pointing to events including Brexit, Allison explains that, “You just have a lot more general uncertainty in Europe. It’s tough to allocate money there.”
This outflow’s relationship to the ambiguity surrounding Brexit is even more evident because it occurred following Parliament’s move to block Prime Minister Boris Johnson’s attempt to remove the U.K. from the EU on October 31, deal or no deal.