Fund sales break record levels

The Investment Association’s monthly statistics of UK investor behaviour in September 2017 show that fixed income and equity funds were investors’ preferred choice in a record-breaking month.

Fund sales break record levels

The data shows that net retail sales broke previous records with £5.6bn in September and the best-selling asset class in Q3 was fixed income, with net retail sales of £4.9bn. The most popular sector in Q3 was Global, with net retail sales of £1.5bn, and industry funds under management hit £1.2trn.

“The UK asset management industry has had yet another record breaking month with net retail sales of £5.6bn, surpassing the previous record set in April this year,” said Chris Cummings, chief executive of the Investment Association.

“With three months of the year to go, 2017 is already the best-selling year since IA records began.”

Alastair Wainwright, fund market specialist at the IA, said: “Fixed Income was the most popular asset class in Q3 2017 with £4.9bn of net retail sales, helped in no small part by the £ Strategic Bond sector which was the best-selling sector with £2.3bn.

“Equity was the second best-selling asset class in Q3, at £3.4bn. The Global and Europe ex UK sectors were the second and third best-selling sectors taking in £1.5bn and £1.3bn in Q3, respectively.

“Notably, the fifth most popular sector was Volatility Managed, which only launched in April this year and took in £864 million in Q3.”

Bumper year

Commenting on the figures, Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “It’s been a bumper year for fund sales across the industry, after a very disappointing 2016, which suggests investors are returning to the fray in large numbers.

“Sales of bond funds have picked up significantly over the summer months, which is bizarre given the heightened expectations of rising interest rates over this period. Much of this money has flowed into strategic bond funds, which in theory have the flexibility to shelter investors from the worst ravages of rising rates on fixed income prices, if the manager makes the right calls.

“Sales of UK equity funds have been abysmal in 2017, continuing last year’s trend, which suggests a high level of pessimism towards the domestic stock market. Global and European Equity funds have really taken up the slack though, as we have seen a resurgent global economy and Europe picking itself up by its bootstraps.

“Sales of Japanese and North American equity funds have also made positive contributions to the total so far this year, though Asian fund sales are still going backwards.

Brexit

“No doubt the malaise affecting UK fund sales is in large part Brexit-related. Almost half of the population voted to remain in the EU, and it’s natural to expect a large portion of this group to be bracing for an economic downturn in the UK.

“However while the Brexit negotiations continue to go from pillar to post, the UK economy has actually held up rather well, to such an extent the Bank of England has seen fit to raise interest rates for the first time in over a decade.

“No-one knows what the economic impact of Brexit will ultimately be, but it’s worth bearing in mind the UK stock market has globally diversified income streams, and for many domestically focused companies there’s already a fair amount of doom and gloom baked into share prices.

“What’s more, the UK is home to some of the most talented fund managers around, so investors shouldn’t ignore their home market when it comes to building a portfolio.”

 

Please remember, no news or research item is a recommendation or advice to buy. Every Investor is not responsible for accuracy and may not share the author’s views. If you are unsure of the suitability of any investment for your circumstances please contact an adviser. All investments can fall as well as rise in value so you could get back less than you invest and tax policies may change.

 

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