Net retail sales reached £2.8 billion in April 2024, marking highest level of inflows since August 2021

FOR IMMEDIATE RELEASE

Net retail sales of UK domiciled funds totalled £2.8 billion in April 2024, marking the highest level since August 2021, according to data published by the Investment Association (IA) today. Sales were boosted by ISA season, as savers sought to utilise their £20,000 personal allowance from the previous tax year, or equally take advantage of a fresh allowance in the new tax year when investing.

Key findings for April 2024

• Net retail sales of £2.8 billion in April, up from £504 million in March 2024.
• Global remained the best-selling sector, with net retail sales of £1.3 billion, the highest since £1.8bn in April 2021.
• Inflows into tracker funds reached a new record of £3.8 billion in April, exceeding the previous high of £3.0 billion in November 2020. Whilst investors favoured equity trackers (£2.6bn in April), all asset classes saw inflows to tracker funds across April, including fixed income and mixed assets at £842 million and £287 million respectively.
• April was the first month for positive inflows into mixed asset funds since March 2022, totalling £376 million. Inflows were concentrated to Mixed Investment 40-85% shares which has historically been the most popular selection among investors.
• Inflows into North American equity declined from £662 million in March to £278 million in April. The sustained rally in US equities since November 2023 faltered as robust economic data from the US led to expectations for rate cuts being pared back.
• Responsible Investment outflows remained neutral at £12 million in April.

The search for diversification

Investors continued to favour global equity funds with inflows of £1.3 billion for a second month in April, the highest figure since £1.8 billion in April 2021. As concerns that the cycle of interest rises might trigger serious recessions have faded, investors have begun to return to equity funds over recent months. Moving forward, the expectation of interest rate cuts later in the year boosts equities, as lower interest rates broadly imply higher values for shares and more economic growth. Global equity funds provide investors exposure to equities while mitigating country specific risk through geographic diversification.

It is noteworthy that inflows into Global were predominantly driven by tracker funds, suggesting investors are focused on achieving diversification at low cost.

Global sector monthly net sales (January 2019 – April 2024)

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

“The positive inflows for April signal the green shoots of investors’ increasing confidence. The sharp rise in inflows can partly be attributed to the new tax year, with strong ISA sales during April as investors sought to maximise their personal allowances. Tracker fund sales reached a new record of £3.8 billion in April, a significant result after the toughest two years for fund flows the industry has ever seen. Cost conscious investors topped up their ISAs, favouring global equity trackers. This supports the results of the IA’s recent ISA survey, which revealed that despite the continued high cost-of-living, 38% of investors ended this tax year having invested more than in the previous tax year.

“As we head to the polls in the UK on July 4^th, it remains to be seen how the UK election will impact investor attitudes, particularly the extent to which it will influence investor demand for UK equities, which have remained in outflow through Q1. The next elected government will have limited fiscal headroom and will be required to balance competing spending priorities, but despite these constraints, there will be an opportunity to restore stability to the UK economy as UK inflation continues to calm and we see tentative growth.”

“The outcome of the November elections in the US will arguably be the most significant for markets. Regardless of who wins, we could see increasingly protectionist policies linked to boosting American industries. The recent implementation of 100% tariffs on Chinese electric vehicles is a further sign of a shift from the globalised, integrated supply chains of the nineties and noughties. In April, global funds dominated overall inflows as UK investors looked for global diversification in. As elections results roll in around the globe, investors and markets will be watching the implications for the global economy.”

ENDS