Interactive Investor

Retail investor confidence high as fund sales continue to boom

2nd July 2021 14:03

Kyle Caldwell from interactive investor

Most asset classes and equity fund regions posted inflows, asides from property and UK funds.

For the 14th month on the spin fund sales were in positive territory, with £3.5 billion invested in May.

The majority of asset classes and equity fund regions posted inflows (more money invested than withdrawn) over the month, with the two exceptions being property and UK funds.

Open-ended property funds continue to be out of favour as investors increasingly question the suitability of the fund structure for investing in property. In May, property funds posted outflows of £184 million.

UK funds, which have recently started to become more popular with investors, saw £571 million withdrawn. The data, from the Investment Association (IA), chimes with that from global funds network Calastone, which in mid-June highlighted that from 11 May onwards UK funds were hit by outflows as Delta variant infection levels accelerated. 

Responsible investment funds were in high demand, with £1.3 billion invested.

In terms of asset classes, mixed-asset funds were the bestselling, with £1.2 billion invested. Such funds invest across asset classes, and in many cases are designed as core holdings providing a specific target balance of risk and return.

Equity was the second best-selling asset class, with £1 billion of inflows, followed by fixed-income funds, which received £986 million from investors.

Of equity regions, global was the most popular, with £736 million invested. North America funds were second, with inflows £206 million, while Europe and Asia were both in positive territory, with £101 million and £59 million invested.

Of the overall £3.5 billion put into funds in May, £2 billion went to actively managed funds and £1.5 billion to index trackers. 

Chris Cummings, chief executive of the Investment Association, said: “The overall mood remains positive as we head into the summer. In response to European stocks performing well, UK savers invested £101 million into Europe funds – the first month of inflows to this region this year.

“Elsewhere, it was encouraging to see that demand for responsible investment funds remains high, reaching flows of £5.5 billion year-to-date.”

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