Record net retail sales as investors pour into UK equities

Friday 5 May 2017

The Investment Association’s monthly statistics of UK investor behaviour in March 2017 show:

• Record net retail sales of over £4 billion in March
• Equity the best-selling asset class with net retail sales of £1.7 billion
• UK All Companies the best-selling sector for the first time since December 2013 with net retail sales of £650 million
• Tracker fund net retail sales over £1.7 billion, the highest since June 2013

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

“Net retail sales reached a record high in March with just over £4 billion flowing into UK authorised funds. We are now starting to see some signs of investor confidence returning following a period of reduced risk appetite in the context of geopolitical and economic uncertainty throughout 2016.”

Alastair Wainwright, Fund Market Specialist, said:

“March was a record selling month with positive net retail sales across all asset classes and for 27 out of 36 IA sectors. Reversing the trend of the past year, retail investors’ appetite for equity funds returned in March as they experienced their second largest monthly inflow on record with £1.7 billion of net retail sales.

“In stark contrast to the outflows we saw in 2016, UK All Companies was the best-selling sector in March with net retail sales of £650 million and UK equity funds as a whole attracted £924 million of new retail money. Tracker funds were the major beneficiaries of investors’ renewed interest in UK equities taking in £596 million, whilst active funds received £328 million in net retail sales.

“Looking at the first quarter of 2017 overall, net retail sales for the industry hit the £6.6 billion mark, the highest level since the first quarter of 2014. Mixed asset funds were the most popular products amongst UK investors, racking up £2.1 billion of net retail sales. Fixed income funds were the second best-selling across the quarter with net retail sales of £1.7 billion, followed by equity funds with sales of £1 billion.

“Total industry funds under management increased by £34 billion over the first quarter of the year with net sales (retail and institutional) contributing £13 billion to this increase and fund performance adding £21 billion.”

FUNDS UNDER MANAGEMENT AND NET SALES

ASSET CLASSES

Equity was the best-selling asset class in March 2017, with net retail sales of £1.7 billion. This is the second largest monthly inflow into the asset class on record and the highest net retail sales since June 2013.

Mixed asset was the second best-selling with net retail sales of £818 million.

Fixed income was the third best-selling asset class with net retail sales of £720 million.

Money Market funds and Property funds saw smaller inflows of £133 million and £52 million respectively.

NET RETAIL SALES OF EQUITY FUNDS BY REGION*

UK equity funds were the best-selling in March with net retail sales of £924 million, the highest since June 2013 when net retail sales were £1.8 billion.

Global equity funds were the next best-selling with net retail sales of £580 million.

European equity funds were the third best-selling with net retail sales of £141 million.

North American funds saw net retail sales of £127 million.

Japanese equity funds experienced a small net retail inflow of £22 million, whilst Asian equity funds saw a small net retail outflow of £59 million.

THE INVESTMENT ASSOCIATION SECTOR RANKINGS

The top five best-selling Investment Association sectors for March 2017 were:

• 1. UK All Companies was the best-selling sector with net retail sales of £650 million.
• 2. Targeted Absolute Return with net retail sales of £381 million.
• 3. Global with net retail sales of £332 million.
• 4. £ Strategic Bond with net retail sales of £257 million.
• 5. UK Equity Income with net retail sales of £239 million.

The worst-selling Investment Association sector in March 2017 was the Asia Pacific Excluding Japan sector with an outflow of £46 million.

RETAIL DISTRIBUTION

In March, gross retail sales for UK fund platforms totalled £10.4 billion, representing a market share of 46.5% (49.2% in March 2016).
Other Intermediaries including UK IFAs and Wealth Managers attracted gross retail sales of £4.8 billion, representing a market share of 21.4% (24.6% in March 2016).

Direct gross retail sales in March were £1.8 billion, representing a market share of 7.8% (7.6% in March 2016).

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 £1,445 million in March.

Personal Pensions had net sales of £901 million, ISAs £577 million, whilst Insurance Bonds and Unwrapped saw net outflows of £3 million and £31 million respectively.

For the same five fund platforms, funds under management as at the end of March 2017 were £237 billion, compared with £201 billion a year earlier.

In March 2017, 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 net retail sales of £343 million.

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

• 1. UK Equity Income (£146 million net sales)
• 2. Global (£64 million net sales)
• 3. Mixed Investment 40-85% Shares (£60 million net sales).

FUND OF FUNDS

Funds of funds had a net retail inflow of £839 million in March 2017.

Funds of funds that invested externally saw net retail sales of £357 million, while funds that invested internally saw net retail sales of £482 million.

Funds under management for funds of funds were £135 billion at the end of March 2017, accounting for 12.4% of industry funds under management, compared with 11.7% in March 2016.

Tracker funds saw a net retail inflow of £1.7 billion, representing the highest level of sales since June 2013. Tracker funds under management stood at £149 billion as at the end of March 2017. Their overall share of industry funds under management was 13.7%, compared with 11.2% in March 2016.

ETHICAL FUNDS

Net retail sales of ethical funds were £32 million in March 2017. Funds under management were £13.2 billion at the end of March, representing a 1.2% share of industry funds under management.

Alex Hogan
Communications Manager
[email protected]
T +44 (0)20 7269 4620
M +44 (0)7508 724 066

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.