Vanguard has announced plans to cut almost £2billion worth of British equities from its popular LifeStrategy funds, reducing UK exposure despite a rally in domestic markets.
The investment giant, which oversees around £9trillion in assets globally, said it will lower the allocation to UK shares in its LifeStrategy range from 25 per cent to 20 per cent.
Just days ago, the Chancellor proclaimed the dawn of “a new golden age for the City” whilst seeking to attract foreign investment to these shores.
Henry Norton, senior investment manager at Arbuthnot Latham, described the decision as “a blow to the Government at a time when they are trying to convince investors of the benefits of increasing their exposure to the UK”.
The fund giant serves four million British customers through its platform.
The changes will see Vanguard reduce its allocation to British shares within the LifeStrategy funds from 25 per cent down to 20 per cent.
This adjustment represents a reduction of £1.85billion in UK equity holdings.
Even steeper cuts are planned for British government and corporate bonds, with exposure to UK debt falling dramatically from 35 per cent to just 20 per cent.
Vanguard will strip nearly £2billion of UK equities from its LifeStrategy funds, cutting domestic exposure despite a market rally
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The rebalancing will be executed in phases between March and June of this year.
In a modest consolation for investors, the firm will lower its management fees on the LifeStrategy range from 0.22 per cent to 0.2 per cent, effective from 27 January.
The FTSE 100 has reached record levels this year, making the withdrawal all the more striking.
Shadow Chancellor Sir Mel Stride offered a withering assessment of the development, declaring it “a clear vote of no confidence in Labour’s economic approach”.
Mel Stride has previously called for the Chancellor to resign
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GB NEWSHe rejected suggestions broader international trends explained the shift, arguing the Chancellor had failed to persuade investors Britain offered genuine growth prospects following what he termed her “benefits Budget.”
Sir Mel urged the Government to curtail public expenditure and reduce taxation to restore investor confidence in the UK.
Reform UK’s deputy leader Richard Tice was equally scathing in his criticism.
“Thanks to this high-tax, high-spend, high-regulation Government, it’s no wonder investors are running scared,” he remarked.
Richard Tice slammed Ms Reeves’s tax policies as ‘anti-investment’
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The political reaction underscores growing concerns about Labour’s stewardship of the economy.
Vanguard attributed the portfolio shift to evolving preferences among British savers, noting that its LifeStrategy offering had developed “a more global focus” as UK investors grew increasingly comfortable placing their capital in international markets.
The company stated that customers now sought portfolios spreading their wealth across the globe whilst retaining meaningful British exposure.
Despite the substantial reduction, Vanguard emphasised its continued commitment to British markets, pointing to £140billion still invested in UK equities.
“We continue to have strong conviction in the UK as an essential part of a diversified portfolio,” the firm stated.
The investment house has built its reputation on competitive fees and its range of tracker funds, making it one of Britain’s most popular platforms for retail investors.