UK investors flock to fixed income and multi asset funds in February

Thursday 30 March January 2017

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

• Net retail sales of £2.2 billion in February, up from £371 million in January
• Mixed asset was the best-selling asset class with net retail sales of £813 million
• Mixed Investment 40-85% Shares best-selling sector with net retail sales of £303 million

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

“UK investors increased their holdings in funds by nearly £2 billion in February, the seventh consecutive month of positive net retail flows into our industry. In the three month period around the Brexit referendum - May, June and July 2016 - UK based retail investors reduced their allocation to funds by £3.8 billion. However, since those outflows more than £10 billion has been invested by retail customers in UK Authorised funds.”

Alastair Wainwright, Fund Market Specialist, said:

“Once again our data shows the value that UK investors place on professional asset allocation skills during challenging economic times. Mixed Asset funds attracted the highest net retail sales in February with the Mixed Investment 40-85% Shares also being the top selling sector.

“Fixed Income was the second best-selling asset class with both Sterling Strategic Bond and Sterling High Yield featuring in the five best-selling sectors. Strategic bond funds have a mandate to invest across the spectrum of fixed income securities, and the strong sales for these products illustrate that UK consumers are looking to professional investors to navigate fixed income markets on their behalf.

“Equities proved to be less popular in February with gross retail sales of £7.4 billion into equity funds countered by near equivalent outflows resulting in net retail sales of £1 million. The highest ranking equity sector was Global in tenth position.”

FUNDS UNDER MANAGEMENT AND NET SALES

ASSET CLASSES

Mixed asset was the best-selling asset class in February 2017, with net retail sales of £813 million.

Fixed income funds were the second best-selling with net retail sales of £766 million.

Money market funds were the third best-selling with net retail sales of £55 million.

Equity funds saw a small net retail inflow of £1 million, up from the £693 million outflow in January.

Property funds experienced a small net retail outflow of £67 million.

NET RETAIL SALES OF EQUITY FUNDS BY REGION*

Global equity funds were the best-selling in February with net retail sales of £257 million.

Japanese equity funds were the next best-selling with net retail sales of £93 million.

North American and European equity funds both saw net retail sales of £31 million.

Asian and UK equity funds saw outflows of £95 million and £350 million respectively.

THE INVESTMENT ASSOCIATION SECTOR RANKINGS

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

• 1. Mixed Investment 40-85% Shares was the best-selling sector with net retail sales of £303 million.
• 2. £ Strategic Bond with net retail sales of £228 million.
• 3. Mixed Investment 20-60% Shares with net retail sales of £164 million.
• 4. £ High Yield with net retail sales of £148 million. This is the first time £ High Yield has featured in the top five since July 2013.
• 5. Targeted Absolute Return with net retail sales of £129 million, following four months as the top-selling sector.

The worst-selling Investment Association sector in February 2017 was the UK All Companies sector with an outflow of £220 million.

RETAIL DISTRIBUTION

In February, gross retail sales for UK fund platforms totalled £7.5 billion, representing a market share of 46.6% (47.7% in February 2016).

Other Intermediaries including UK IFAs and Wealth Managers attracted gross retail sales of £3.9 billion, representing a market share of 23.9% (24.9% in February 2016).

Direct gross retail sales in February were £994 million, representing a market share of 6.1% (8.0% in February 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 £803 million in February.
Personal Pensions had net sales of £568 million, Unwrapped £144 million, ISAs £96 million and Insurance Bonds saw a small net retail outflow of £5 million.

For the same five fund platforms, funds under management as at the end of February 2017 were £233 billion, compared with £196 billion a year earlier.

In February 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 a net outflow of £143 million.

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

• 1. Mixed Investment 40-85% Shares (£28 million net sales)
• 2. Mixed Investment 20-60% Shares (£22 million net sales)
• 3. Global (£19 million net sales)

FUND OF FUNDS

Funds of funds had a net retail inflow of £479 million in February 2017.

Funds of funds that invested externally saw net retail sales of £294 million, while funds that invested internally saw net retail sales of £185 million.

Funds under management for funds of funds were £128 billion at the end of February 2017, accounting for 12.0% of industry funds under management, compared with 11.5% in February 2016.

Tracker funds saw a net retail inflow of £712 million. Tracker funds under management stood at £147 billion as at the end of February 2017. Their overall share of industry funds under management was 13.8%, compared with 11.6% in February 2016.

ETHICAL FUNDS

Net retail sales of ethical funds were £28 million in February 2017. Funds under management were £12.9 billion at the end of February, 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.