Bonds fall out of favour as savers pull £1.7bn from Fixed Income funds

 

Thursday 6 December 2018

The Investment Association’s monthly statistics of UK investor behaviour in October 2018 show:

 

• Net retail sales were negative in October, with £2.1 billion of outflows from UK authorised and recognised funds, and funds under management totalling £1.2 trillion.
• Fixed Income experienced net retail outflows of £1.7 billion.
• Global was the best-selling sector with net retail sales of £340 million.

Chris Cummings, Chief Executive of the Investment Association, said:

 

 

“Savers are stepping back from bonds with notable outflows from Fixed Income funds in October. With the era of quantitative easing anticipated to end in both the US and Europe, Fixed Income funds have seen their appeal dented. This declining appetite for bonds has contributed to UK funds experiencing their largest net retail outflow since the EU referendum, although it remains to be seen whether this is the start of a broader trend within Fixed Income.”

FUNDS UNDER MANAGEMENT AND NET SALES

	Funds Under Management	Net Retail Sales	Net Institutional Sales
October 2018	£1.2 trillion	-£2 billion	-£764 million
October 2017	£1.2 trillion	£5.3 billion	£2 billion

ASSET CLASSES

Mixed Asset was the best-selling asset class with £504 million in net retail sales.

Money Market were the second best-selling asset class with net retail sales of £215 million.

All the other asset classes experienced net retail outflows.

Property saw net retail outflows of £40 million.

Equity experienced a net retail outflow of £137 million, followed by funds classified as Other (which includes the Targeted Absolute Return and Volatility Managed), which experienced outflows of £895 million.

Fixed Income experienced outflows of £1.7 billion in net retail sales.

 

NET RETAIL SALES OF EQUITY FUNDS BY REGION*

 

North America funds were the best-selling in October with net retail sales of £117 million.

Asia funds were the next best-selling with net retail sales of £115 million.

Japan funds were the third best-selling with net retail sales of £99 million.

Global funds experienced net retail inflows of £34 million and Europe funds experienced net retail outflows of £173 million.

UK funds experienced net retail outflows of £229 million.

 

Region	Net retail sales in October 2018	Average net retail sales for previous 12 months
North America	£117 million	£117 million
Asia	£115 million	£145 million
Japan	£99 million	£144 million
Global	£34 million	£250 million
Europe	-£173 million	£51 million
UK	-£229 million	-£424 million

 

THE INVESTMENT ASSOCIATION SECTOR RANKINGS

 

The five best-selling Investment Association sectors for October 2018 were:

• Global was the best-selling sector with net retail sales of £340 million.
• Mixed Investment 40-85% Shares with net retail sales of £230 million.
• Volatility Managed with net retail sales of £137 million.
• Asia Pacific Excluding Japan with net retail sales of £122 million.
• Short Term Money Market with net retail sales of £113 million.

The worst-selling Investment Association sector in October 2018 was Targeted Absolute Return with an outflow of £864 million.

 

Investment Association Sector	Ranking in October 2018	Net retail sales in October 2018	Ranking in September 2018	Net retail sales in September 2018	Asset Class
Global	1	£340 million	2	£236 million	Equity
Mixed Investment 40-85% Shares	2	£230 million	1	£268 million	Mixed Asset
Volatility Managed	3	£137 million	4	£172 million	Other
Asia Pacific Excluding Japan	4	£122 million	7	£97 million	Equity
Short Term Money Market	5	£113 million	34	-£38 million	Money Market

RETAIL DISTRIBUTION

 

In October, gross retail sales for UK fund platforms totalled £9.7 billion, representing a market share of 46.3% (39.7% in October 2017).

Other Intermediaries including UK IFAs made gross retail sales of £5.2 billion, representing a market share of 25.1% (27.3% in October 2017).

Direct gross retail sales in September were £1.5 billion, representing a market share of 7.1% (6.9% in October 2017).

FUND PLATFORM PRODUCT SALES

 

The five fund platforms that provide data to The Investment Association (AEGON, Fidelity, Hargreaves Lansdown, Old Mutual Wealth and Transact) saw net inflows of £379 million in October.

Personal Pensions had net sales of £608 million. Insurance Bonds saw net outflows of £4 million, whilst Unwrapped and ISAs experienced net outflows of £89 million and £135 million, respectively.

For the same five fund platforms, funds under management as of the end of October 2018 were £265 billion, compared with £255 billion a year earlier.

 

ISAs**

 

In October 2018, funds in ISAs provided by fund companies and the five fund platforms that feed data to The Investment Association (AEGON, Fidelity, Hargreaves Lansdown, Old Mutual Wealth and Transact) saw a net retail outflow of £365 million.

 

The three best-selling sectors for ISAs based on the five fund platforms were:

• Mixed Investment 40-85% Shares (£24.6 million net sales)
• Mixed Investment 20-60% Shares (£24.3 million net sales)
• Volatility Managed (£15 million net sales)

FUND OF FUNDS

 

Funds of funds had a net retail inflow of £294 million in October.

Funds of funds that invested externally saw net retail sales of £64 million, while funds that invested internally saw net retail sales of £230 million.

Funds under management for funds of funds were £152 billion at the end of October 2018, accounting for 12.7% of industry funds under management, compared with 12.3% in October 2017.

 

TRACKER FUNDS

 

Tracker funds saw a net retail inflow of £554 million. Tracker funds under management stood at £187 billion as of the end of October 2018. Their overall share of industry funds under management was 15.6%, compared with 14.5% in October 2017.

ETHICAL FUNDS

 

Ethical funds experienced net retail inflows of £91 million in October 2018. Funds under management were £16 billion at the end of October, representing a 1.3% share of industry funds under management.

-ENDS-

For further information, please contact:

Anisha Patel, Head of Communications: [email protected]

T +44 (0)20 7269 4635

Helen Ayres, Media Relations Manager: [email protected]

T +44 (0)20 7269 4620; M +44 (0)7508 724 066

Notes for Editors

To see a breakdown of the data referenced in this press release, please see all of the tables here.

The Investment Association's figures for fund sales cover retail and institutional sales in authorised unit trusts and open ended investment companies (OEICs) provided by our membership to UK investors. The figures do not include investment trusts and ETFs.

Each month small revisions to figures have been made since the previous press release. This reflects additional information received by The Investment Association.

Net retail sales comprise total retail sales minus repurchases (including switches between funds), thus the figures can result in a negative figure or outflow.

* Regional breakdown for equity funds

The following Investment Association sectors have been grouped together to compile the figures for regional equity sales:

Asia	Europe	Global	Japan	North America	UK
Asia Pacific excl. Japan	Europe excl. UK	Global	Japan	North America	UK All Companies
Asia Pacific incl. Japan	Europe incl. UK	Global Emerging Markets	Japanese Smaller Companies	North America Smaller Companies	UK Equity Income
China/Greater China	Europe Smaller Companies	Global Equity Income			UK Smaller Companies
		Specialist
		Technology and Telecommunications

Direct Channels

Direct includes sales forces and tied agents, private clients and other direct to investor sales without intermediation.

** The Investment Association’s ISA figures are based on information collected from fund companies and five fund platforms (AEGON, Fidelity, Hargreaves Lansdown, Old Mutual Wealth and Transact) where they are the ISA provider. Fund business through other ISA providers such as wealth managers is not included. The Investment Association’s figures cover about three-quarters of the whole of the market for funds held in ISAs.

About the Investment Association:

The IA champions UK asset management, supporting British savers, investors and businesses. Our 250 members manage £7.7 trillion of assets and the asset management industry supports 100,000 jobs across the UK.

Our mission is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for
the economy, so everyone prospers.

• Our purpose is to ensure investment managers are in the best possible position to:
• Build people’s resilience to financial adversity
• Help people achieve their financial aspirations
• Enable people to maintain a decent standard of living as they grow older
• Contribute to economic growth through the efficient allocation of capital.

The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.

The UK is the second largest investment management centre in the world, after the US and manages 35% of all assets managed in Europe.