Fund sales bounce back in August after Brexit slump

Monday 3 October 2016

The Investment Association’s monthly statistics of UK investor behaviour in August 2016 show:

• Funds under management now stand over £1 trillion
• Net retail sales of £1.7 billion in August
• Fixed Income was the best selling asset class with sales over £1.2 billion
• Targeted Absolute Return was the most popular sector with sales of £480 million

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

“Industry funds under management reached a record high of £1 trillion in August further cementing the importance of the asset management industry in the UK. Net retail sales were £1.7 billion, reversing the Brexit related outflows of the past few months. However, caution is still evident as retail investors continue to prefer fixed income and absolute return strategies to traditionally more risky equity products.”

Alastair Wainwright, Fund Market Specialist at the Investment Association added:

“Although markets have rallied due to looser monetary policy from the Bank of England and the weaker pound, UK investors remain cautious in their asset allocation decisions. The widely anticipated decision by the Bank of England to cut the bank rate to 0.25% enticed investors to fixed income funds which benefited from lower bond yields.

Absolute return strategies remained popular with retail investors; the Targeted Absolute Return sector was the best-selling sector for the eighth month in the past year. August saw the highest monthly inflow in the past year for mixed asset funds, following small outflows in May and June.

Despite equity markets rallying since the initial fallout of the referendum result, UK investors continue to sell out of equity funds. However, global equity funds have received positive inflows for the past two months as UK investors move away from regionally focused funds. The Specialist sector received the largest outflows as investors sold out of emerging market equity funds.”

FUNDS UNDER MANAGEMENT AND NET SALES

ASSET CLASSES

Fixed Income funds were the best-selling asset class in August with net sales of £1.2 billion.

Mixed Asset funds were the second best-selling with net retail sales of £412 million.

Money Market funds were the third best-selling with net retail sales of £200 million.

Property funds saw a small net retail inflow of £1 million.

Equity funds saw a net retail outflow of £629 million..

NET RETAIL SALES OF EQUITY FUNDS BY REGION*

Apart from Global equity funds which had an inflow of £189 million, we saw outflows across all other regions in August.

European equity funds saw the largest outflow of £297 million, followed by UK equity funds which had an outflow of £162 million.

Japanese equity funds and North American equity funds had outflows of £134 million and £123 million respectively.

Asian equity funds saw the lowest outflow of £52 million.

THE INVESTMENT ASSOCIATION SECTOR RANKINGS

The top five best-selling Investment Association sectors for August 2016 were:

• 1. Targeted Absolute Return was the best-selling sector with net retail sales of £480 million.
• 2. Global with net retail sales of £405 million.
• 3. £ Corporate Bond with net retail sales of £379 million.
• 4. £ Strategic Bond with net retail sales of £264 million.
• 5. Global Bonds with net retail sales of £242 million.

The worst-selling Investment Association sector in August 2016 was the Specialist sector with a net retail outflow of £247 million.

RETAIL DISTRIBUTION

In August, gross retail sales for UK fund platforms totalled £7.4 billion, representing a market share of 45.3% (48.7% in August 2015).

Other Intermediaries including UK IFAs and Wealth Managers attracted gross retail sales of £3.8 billion, representing a market share of 23.4% (22.3% in August 2015).

Direct gross retail sales in August were £1.3 billion, representing a market share of 8.1% (10.1% in August 2015)..

FUND PLATFORM PRODUCT SALES

For the five fund platforms that provide data to The Investment Association (Cofunds, Fidelity, Hargreaves Lansdown, Old Mutual Wealth and Transact) we saw net retail sales of £725 million in August.

Personal Pensions had net sales of £600 million, ISAs (£96 million), Unwrapped (£19 million) and Insurance Bonds (£11 million).

For the same five fund platforms, funds under management as at the end of August 2016 were £218 billion, compared with £190 billion a year earlier.

ISAs**

In August 2016, funds in ISAs provided by fund companies and the five fund platforms that feed data to The Investment Association (Cofunds, Fidelity, Hargreaves Lansdown, Old Mutual Wealth and Transact) saw a net outflow of £146 million.

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

• 1. UK Equity Income (£23 million net sales)
• 2. Mixed Investment 40-85% Shares (£22 million net sales)
• 3. Mixed Investment 20-60% Shares (£19 million net sales)

FUND OF FUNDS

Funds of funds had net retail sales of £321 million in August 2016.

Funds of funds invested into the same firm’s funds saw net retail sales of £231 million, compared to £90 million in funds of funds that invest externally.

Funds under management for funds of funds were £118 billion at the end of August 2016, accounting for 11.7% of industry funds under management, compared with 11.5 % in August 2015.

Tracker funds saw a net retail inflow of £623 million with funds under management of £136 billion as at the end of August 2016. Their overall share of industry funds under management was 12.2%, compared with 10.4% in August 2015.

ETHICAL FUNDS

Net retail sales of ethical funds were £107 million in August 2016. Funds under management were £11.9 billion at the end of August, representing a 1.1% share of industry funds under management.

John Kenchington
Director of Communications
[email protected]
T 020 7269 4629
M 07834 089 332

Linsey White
Head of Media Relations
+44 (0)20 7269 4635
+44 (0)7508 724 022

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 may 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.

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

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 (Cofunds, 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 Investment Association is the trade body that represents UK investment managers who manage over £5.7 trillion on behalf of clients
• 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 37% of all assets managed in Europe.