Responsible investment funds under management up 66% over 12 months
Thursday 4 March 2021
UK savers put almost £1bn a month on average into responsible investment funds in 2020, new statistics published today by the Investment Association (IA) reveal, while net retail sales into responsible investment funds in January 2021 reached £1.2bn.
The IA has for the first time published more detailed responsible investment fund data in line with the IA’s 2019 Responsible Investment Framework, to provide investors with more insight into this rapidly growing area of the fund market and help them compare funds. This new data will be published on a quarterly basis going forward and includes:
- Of the £1.2bn invested in responsible investment funds in January, £703m was invested in equity funds, £180m was invested in bond funds and £241m was invested in mixed asset funds. Total net retail sales over the last 12 months were £12.4bn – 43% of total net sales.
- Over the last 12 months, responsible investment equity funds make up the highest proportion of flows, with average monthly sales of £510m across the time period.
- Responsible investment funds under management now totals over £56bn, growing 66% over the past 12 months, in comparison to 7% across funds overall.
- Almost 60% of the £56bn is invested in equity funds, with 20% in bond funds and 20% in mixed asset funds.
- 66% of responsible investment funds under management have a sustainability focus and 72% exclude certain types of investments, with 42% doing both.
In January 2021 across the broader fund market, net retail sales maintained a strong £3.2bn inflow. The other key findings for January include:
- Bond funds were the best-selling asset class in January, attracting net retail sales of £2.2bn.
- Tracker funds saw net retail sales of £2bn in January, while active funds attracted £1.2bn.
- Global and Global Bonds were the best and second best-selling sectors in January, attracting net retail sales of £826m and £596m respectively.
Chris Cummings, Chief Executive of the Investment Association, said:
“Responsible investment funds continue to capture investors’ imagination, reaching more than 40% of all net sales over the last year. This growth is indicative of how important investing with environmental, social and governance considerations in mind has become.
“Across the wider fund market, savers started the New Year in a quietly optimistic mood, as they placed a strong £3.2bn into funds in January. As the COVID vaccine optimism that buoyed stocks and shares funds at the end of 2020 began to wane, equity fund sales were down month on month as investors opted for bond funds in January.”
RESPONSIBLE INVESTMENT FUNDS
Responsible investment funds saw a net retail inflow of £1.1 billion in January 2021. Responsible investment funds under management stood at £57 billion as of the end of January. Their overall share of industry funds under management was 4%.
RESPONSIBLE INVESTMENT FUNDS NET RETAIL SALES BY ASSET CLASS
| January 2021 | December 2020 | November 2020 | |
| Equity | £704m | £604m | £606m |
| Fixed Income | £180m | -£0.8m | -£35m |
| Mixed Asset | £241m | £411m | £579m |
| Other (incl. Property) | £32m | £64m | £40 |
TOTAL FUNDS UNDER MANAGEMENT AND NET SALES
| Funds Under Management | Net Retail Sales | Net Institutional Sales | |
| January 2021 | £1.4 trillion | £3.2 billion | -£1.7 billion |
| January 2020 | £1.3 trillion | £4.9 billion | £2.7 billion |
BEST SELLING INVESTMENT ASSOCIATION SECTORS
The five best-selling Investment Association sectors for January 2021 were:
- Global was first with net retail sales of £826 million.
- Global Bonds was second with net retail sales of £596 million.
- Mixed Investment 40-85% Shares followed with net retail sales of £445 million.
- Global Emerging Markets Bond – Local Currency was fourth with net retail sales of £321 million.
- Volatility Managed was fifth with net retail sales of £310 million.
The worst-selling Investment Association sector in January 2021 was Short Term Money Market with an outflow of £734 million.
NET RETAIL SALES BY ASSET CLASS
Fixed Income funds were the best-selling asset class in January 2021 with £2.2 billion in net retail sales.
Equity was the second best-selling asset class, with £788 million of inflows.
Mixed Asset experienced £719 million of inflows.
Other funds (which includes the Targeted Absolute Return, Volatility Managed, and Unclassified sectors) experienced £280 million of net retail sales.
Property funds experienced £117 million in net retail inflows.
However, Money Market funds experienced net retail outflows in January of £893 million.
NET RETAIL SALES OF EQUITY FUNDS BY REGION*
Global was the best-selling equity fund region in January 2021, with net retail sales of £779 million.
Asia funds were second, seeing net retail inflows of £264 million.
Japan funds came next with net retail inflows in January of £72 million.
North America funds experienced net retail outflows of £165 million.
Europe funds saw net retail inflows of £188 million.
UK funds saw net retail outflows of £685 million.
TRACKER FUNDS
Tracker funds saw a net retail inflow of £2 billion in January 2021. Tracker funds under management stood at £257 billion as of the end of January. Their overall share of industry funds under management was 18%.
GROSS RETAIL SALES BY DISTRIBUTION CHANNEL
In January, gross retail sales for UK fund platforms totalled £13 billion, representing a market share of 47.2%.
Gross retail sales through Other UK Intermediaries including IFAs were £7.6 billion, representing a market share of 27.8%.
Direct gross retail sales in January were £1.9 billion, representing a market share of 6.9%.
ENDS
For further information, please contact:
Katie Martin, Head of Communications: [email protected]
T: +44 (0)20 7269 4655
Helen Ayres, Communications Manager: [email protected]
T: +44 (0)20 7269 4620
David Parton, Communications Executive: [email protected]
T: +44 (0)20 7269 4625
IA press office: [email protected]
T: 020 7269 4696
Notes to 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.
IA data on responsible investments has been collected using the IA's Responsible Investment Framework. Responsible investment incorporates firm-level and fund-level components. The data presented here is at the fund level where funds are pursuing one or more of the following responsible investment approaches and this approach is referenced in the fund documentation: exclusions; sustainability focus; impact investing.
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:
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.
About the Investment Association (IA):
- The IA champions UK investment management, supporting British savers, investors and businesses. Our 250 members manage £8.5 trillion of assets and the investment management industry supports 113,000 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 over a third (37%) of all assets managed in Europe.
