Vanguard dumps £2bn of UK shares: Fund big cuts publicity to Britain in blow to Reeves

One of the world’s biggest fund managers is pulling cash out of Britain as it spurns the Chancellor’s efforts to boost investment in the UK.

Vanguard, which looks after around £9trillion of savers’ money, is ditching UK stocks worth nearly £2billion held by its popular LifeStrategy funds.

The firm, one of the country’s best-known investment platforms with four million UK users, said the move reflects the ‘more global focus’ of British investors.

The move is embarrassing for Rachel Reeves, who this week hailed ‘a new golden age for the City’ before jetting off to the World Economic Forum in Davos ‘to champion Britain as one of the best places in the world to invest’.

The FTSE 100 has hit record highs this year, boosting its allure at a time when confidence in the US has been shaken by Donald Trump’s attacks on the Federal Reserve and threats to take over Greenland.

Henry Norton, senior investment manager at private bank Arbuthnot Latham, said Vanguard’s move was ‘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’.

Setback: Chancellor Rachel Reeves (pictured) has attended the World Economic Forum in Davos this week

And Shadow Chancellor Sir Mel Stride said it was ‘a clear vote of no confidence in Labour’s economic approach’.

Meanwhile, Reform UK deputy leader Richard Tice said: ‘Thanks to this high-tax, high-spend, high-regulation Government, it’s no wonder investors are running scared.’

Vanguard said it would reduce exposure to UK equities in its LifeStrategy range from 25 per cent to 20 per cent, which it will carry out in stages between March and June.

That amounts to a cut of £1.85billion in UK equity holdings.

It is making even more drastic cuts in exposure to UK debt, from 35 per cent to 20 per cent, in the LifeStrategy funds which hold government and corporate bonds as well as other similar fixed income investments.

And in a boost to investors, it will cut the fees on its LifeStrategy range from 0.22 per cent to 0.2 per cent from January 27.

Vanguard said: ‘Over time, as UK investors have grown more confident investing internationally, LifeStrategy has evolved to have a more global focus.

‘More investors want a mix that spreads their money across the world, while keeping a meaningful investment in the UK. To reflect this, the LifeStrategy funds’ exposure to global markets is set to increase.’

‘Global focus’: Vanguard, which looks after around £9trillion of savers’ money, is ditching UK stocks worth nearly £2bn held by its popular LifeStrategy funds

Noting it still has £140billion invested in UK equities, Vanguard added: ‘We continue to have strong conviction in the UK as an essential part of a diversified portfolio.’ 

Vanguard is one of the UK’s most popular investment providers, attracting customers with its relatively low fees and range of tracker funds.

Sir Mel said: ‘This is a clear vote of no confidence in Labour’s economic approach. It’s not about global trends – it’s about a Chancellor failing to convince investors the UK is the place to look for growth, following her benefits Budget.

‘It doesn’t have to be this way: rein in government spending, cut taxes, and give investors the confidence they need to invest in the UK.’