Investors have been spreading money (and risk) around the world, but what’s their favourite destination?
Investors are putting more of their money into global funds and bonds than any other sectors, as they seek to avoid having all their investment eggs in one basket.
Global stocks and shares funds and Global Bond funds were the top two best-selling sectors in October, according to figures from the Investment Association.
In another sign of investors’ decision to diversify their portfolios, mixed asset funds was the best-selling asset class in October. Investors put £1.2 billion into funds that invest in more than one asset class.
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Investor caution was also clear in their preference for Fixed Income, often a safe haven for worried investors. It was the second best-selling asset class, attracting £698 million of investors’ money.
The five best-selling Investment Association sectors for October 2020 were Global equities, which attracted £869 million of investors’ cash, Global Bonds (£793 million), Mixed Investment 40-85% Shares (£569 million), UK Gilts (£366 million), and Volatility Managed (£251 million).
Overall, UK investors put £2.5 billion into funds in October – but pulled £782 million out of UK-focused funds as Britain continues to suffer the devastating economic impact of Covid-19.
Chris Cummings, chief executive of the Investment Association, said: “As a second wave of Covid-19 infections became more apparent in October, savers looked to diversify their portfolios by backing global stocks and bonds in an effort to weather the storm. Investors also opted for the relative safety of UK gilts.”
Investors also continued to support responsible investment funds with £1 billion more invested in October, the first time the responsible sector has taken that much in a single month. Responsible funds now make up 3% of the investment industry’s funds under management.
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Less popular was the UK Equity Income sector. It reported investors moved a net £644 million out of its funds during the month.
Property funds were also out of favour in October, as Covid-19 continues to reshape the high street and city centres. Demand for retail space is collapsing alongside the failure of department and chain stores from Topshop to Debenhams, and the move to work from home is making central large office blocks obsolete.
As a result, investors pulled a net £164 million out of property funds in October.
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In terms of regions, after global funds investors favoured Asia (£202 million) and North America, (£127 million), shunning Europe and the UK.
Investors also put £1.7 billion into tracker funds in October 2020. Trackers funds’ overall share of industry funds under management was 17.6%.
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