Investors added almost £5 billion to investment funds in May
Tracker funds saw £1.3 billion in net inflows, well under half that of active fund inflows.
6th July 2020 12:38
by Tom Bailey from interactive investor
Tracker funds saw £1.3 billion in net inflows, well under half that of active fund inflows.
Investors contributed almost £5 billion into investment funds in May 2020, according to data from the Investment Association (IA).
Continuing the trend of positive inflows from April, May saw a net total of £4.7 billion flow into investment funds.
Chris Cummings, chief executive of the IA, notes: “It was steady as she goes for the fund market in May, as net retail sales continued their stable recovery after significant outflows in March.”
Within this, active funds appeared to be increasingly popular. In May, active funds saw a total of £3.5 billion in net inflows. In contrast, tracker funds saw £1.3 billion in net inflows, well under half that of active fund inflows.
Tracker funds had a total of £224 billion under management as of the end of May, giving them a total share of industry funds under management of 18%.
Meanwhile, there was a strong pick-up in investment in funds focused on bonds. In total, bond funds saw net inflows of £1.9 billion, roughly double that of the previous month. That also made fixed income the bestselling asset class. Compared to the £1.9 billion of inflows into bond funds, equity funds saw inflows of £1.6 billion.
Investment in sustainable funds continued to be strong. As Cummings notes: “Responsible investment funds sustained their strong momentum by pulling in close to a record £1 billion for a second month in a row.”
By avoiding sectors such as oil and airlines that have done particularly badly during the lockdown, sustainable funds have, for the most part, managed to produce better performance.
Looking at specific IA sectors, the bestselling was global, which saw net retail sales of £873 million. This was followed by short-term money market with net inflows of £829 million. North America was third, with a net inflow of £729 million.
Investors took a particularly dim view of European-focused funds; the Europe excluding UK sector was the least popular with a net outflow of £451 million.
This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.
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