Interactive Investor

Fund sales are booming: Here's what investors are buying

8th May 2017 17:01

Kyle Caldwell from interactive investor

Fund sales soared to a record high in the month of March, figures from the Investment Association (IA) show. 

March is often the big month of the year for fund management firms and brokers, as there's usually a traditional last-minute rush by investors to take full advantage of their Isa allowance ahead of the tax year-end.

This year proved to be no exception, with £4 billion invested, a record high surpassing the previous peak of £3.7 billion recorded in July 2015 - which was a month ahead of Black Monday when global stockmarkets went into freefall.

Tracker funds took almost half of the fund sales, accounting for £1.7 billion. This is the highest level of sales for tracker funds since June 2013. Today 13.7p in every £1 invested is held in a tracker funds, compared with 11.2p a year ago.

In terms of investment type, it was equity funds that proved the most popular, taking £1.7 billion of retail investors' money.

UK growth funds, which sit in the IA's UK all companies sector, were the most soughtafter, with £650 million invested. This marks a dramatic reversal in fortunes as the sector was the least popular in February.

As ever, Targeted Absolute Return funds were in favour, recording net retail sales of £381 million. But as Money Observer has previously pointed out, it is a tricky sector to navigate, as performance has regularly disappointed over the years.

In third place in the popularity stakes was the IA's global sector, followed by strategic bond and UK equity income. Multi-asset funds were also in high demand, with £818 million invested across the various sectors.

Chris Cummings, chief executive of the Investment Association, put the record fund sales down to investor confidence returning. He said this is "following a period of reduced risk appetite in the context of geopolitical and economic uncertainty throughout 2016".

The three least popular sectors were Asia Pacific excluding Japan, UK index linked gilts and global equity income.

Investment Association Sector Ranking in Mar 2017 Net retail sales in Mar 2017 Ranking in Feb 2017 Net retail sales in Feb 2017 Asset Class
UK All Companies 1 £650 million 36 -£220 million Equity
Targeted Absolute Return 2 £381 million 5 £133 million Other
Global 3 £332 million 10 £91 million Equity
£ Strategic Bond 4 £257 million 2 £228 million Fixed Income
UK Equity Income 5 £239 million 35 -£174 million Equity

 

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This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.

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