03
Oct
2024

Investors remain cautiously optimistic with third consecutive month of positive flows – IA monthly retail stats release

  • Bond funds dominated inflows in August, with net retail sales of £1.8 billion.
  • North American equity funds saw the highest equity net retail inflows of £527 million ahead of Federal Reserve rate cuts in September.
  • Investor appetite for tracker funds remained consistent, with substantial inflows of £2.5 billion continuing throughout the month of August.

3rd October 2024 – Net retail sales of investment funds remained positive for the third consecutive month, totalling £804 million in August, according to data published by the Investment Association (IA) today. 

While net retail sales stayed in the green, overall sales were slightly down month-on-month, likely due to the quieter summer period. This is in line with the expected seasonal trend, with IA data showing gross sales for August only exceeding the yearly average only twice in the past decade.

Key findings for August 2024

  • Inflows to index tracking funds were consistently high at £2.5 billion in August, against net retail sales overall of £804 million. However, this is a slight decline from the £3.4 billion in July.
  • Equity fund outflows accelerated in August, reaching £408 million, a significant increase from £50 million in July.
  • North American equity funds led the equity sectors with net retail inflows of £527 million coming in spite of US market volatility in late July. Sales may be boosted further following confirmation of Federal Reserve rate cuts of 50 basis points in September.
  • UK equities have seen outflows drop further to £829 million, the lowest outflow for 2024 to date.
  • UK Smaller Companies outflows have seen a mild decline to an almost neutral £11 million. Small cap stocks tend to draw a higher proportion of revenues from the domestic economy, so easing UK Smaller Company outflows signal a potential improvement in investor confidence following positive GDP growth of 0.5% in Q2 2024, and the certainty offered by the UK general election result.
  • Money market funds saw their first outflows since March, with net withdrawals totalling £316 million in August.
  • Responsible investment funds showed signs of improvement in August, with net outflows narrowing to £343 million, compared to £390 million in July.

Fixed income in favour

Fixed income funds recorded the highest inflow of the year to date, with net retail sales of £1.82 billion, up from £518 million in July 2024. In particular, the Government Bond sectors saw the highest sales with inflows of £837 million, followed by the Sterling Strategic Bond sector at £731 million.

The return to fixed income may be a response to recent equity market volatility with bonds helping to provide stable returns for investor portfolios. With further interest rate cuts on the horizon, investors may also want to opt for bond funds, because as yields fall on the back of lower interest rates, it will cause bond prices to rise, boosting returns.

Fixed income net retail sales (August 2023 – August 2024)

 

Miranda Seath, Director, Market Insight at the Investment Association, said:

“Our monthly retail sales figures reveal three consecutive months of net inflows, pointing to a continuing trend of cautious optimism among investors.

The Fed’s more aggressive interest rate cut of 50 basis points in September represents a significant milestone, as the Fed seeks to steer the US economy to a soft economic landing and markets responded positively. 

We have moved past the peak of the rate cycle in the UK and the US and the outlook for equity markets is improving but investors remain cautious, continuing to opt for bonds over equities. Recent short-lived market volatility in the US at the end of July was partly fuelled by poorer than expected jobs growth. The path to a soft landing could be bumpy and this could bring new pockets of market volatility.  

And whilst UK investor confidence is improving investors are also waiting to see what the Autumn Budget holds. Post Budget we may see further adjustment to asset allocation .”

ENDS


APPENDIX

FUNDS UNDER MANAGEMENT AND NET SALES – August 2024

                                   

Funds Under Management   

Net Retail Sales   

Net Institutional Sales   

August 2024

£1.51 trillion   

£804 million 

-£1.59 billion   

August 2023  

£1.37 trillion   

-£3.22 billion

-£1.83 billion  

BEST SELLING INVESTMENT ASSOCIATIONSECTORS

The five best-selling Investment Association sectors for August 2024 were:  

  1. Government Bond with net retail sales of £837 million.  
  2. £ Strategic Bond followed with net retail sales of £731 million. 
  3. North America with net retail sales of £465 million.   
  4. Global with net retail sales of £355 million.   
  5. Volatility Managed was fifth with net retail sales of £274 million.        

The worst-selling Investment Association sector in August 2024 was UK All Companies, which experienced outflows of £629 million.  

NET RETAIL SALES BY ASSET CLASS

Fixed Income saw £1.82 billion in inflows.

Other saw £68 million in inflows. 

Property saw £167 million in outflows. 

Mixed Asset saw £192 million in outflows.

Money Market saw £316 million in outflows.

Equity saw £408 million in outflows.

NET RETAIL SALES OF EQUITY FUNDS BY REGION* 

North America saw net retail inflows of £527 million.

Global funds saw net retail inflows of £308 million.

Japan funds experienced outflows of £12 million.

Asia funds experienced outflows of £98 million.

Europe funds experienced outflows of £168 million.

UK funds saw net retail outflows of £829 million.

TRACKER FUNDS

Tracker funds saw net retail inflows of £2.5 billion in August 2024. Tracker funds under management stood at £364.1 billion at the end of August. Their overall share of industry funds under management was 24.1%.

RESPONSIBLE INVESTMENT FUNDS

Responsible investment funds saw a net retail outflow of £343 million in August 2024. Responsible investment funds under management stood at £104 billion at the end of August. Their overall share of industry funds under management was 6.9%.

 

Notes to editors

To see a breakdown of the fund data referenced in this press release, please see all 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   

India/Indian Subcontinent   

    

Specialist   

    

    

    

    

    

Healthcare   

    

    

    

    

    

Technology and Technology innovation    

    

    

    

    

    

Financials and Financial innovation    

    

    

    

    

    

    

    

    

    

    

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, Quilter, 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.    

 

For further information, please contact:

Helen Ayres, Head of Communications: [email protected]

T: +44 (0)20 7269 4620

Ellen Hodgetts, Communications Manager: [email protected]

T: +44 7548841289

Ismail Abdi, Communications Executive: [email protected]

T: +44 7596 872575

IA Press Office: [email protected]

About the Investment Association (IA):

  • The IA champions UK investment management, supporting British savers, investors and businesses. Our 250 members manage £9.1 trillion of assets and the investment management industry supports 126,400 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 37% of all assets managed in Europe.