Brexit Angst Hits Largest Europe ETF With Year’s Biggest Outflow

(Bloomberg) -- The U.K.’s Brexit battle has exchange-traded fund investors heading to the exits.

Close to $177 million has left the Vanguard FTSE Europe ETF in September, after the fund suffered its biggest daily withdrawal in more than 10 months, data compiled by Bloomberg show. More than 23% of its holdings are in British companies, which still have little clarity on the nation’s future relationship with the European Union.

“You just have a lot more general uncertainty in Europe,” Dunkin Allison, director of portfolio management at Delegate Advisors, said in a phone interview, pointing to events including Brexit. “It’s tough to allocate money there.”

The outflow from Vanguard Group’s $13 billion fund, known as VGK, came as the U.K. Parliament moved to block Prime Minister Boris Johnson’s efforts to take the country out of the EU on Oct. 31, with or without a deal. Johnson suffered a sixth-consecutive defeat in the House of Commons -- this time over his attempts to call a snap election -- on Monday and Parliament is now suspended. The prime minister has promised to work toward a deal.

However, Brexit is not the only uncertainty roiling Europe. Elsewhere in the region, investors are cautiously looking ahead to the European Central Bank’s policy meeting this week, where officials are widely expected to unleash a barrage of stimulus to shore up economic growth.

To contact the reporter on this story: Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Rachel Evans, Rita Nazareth

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