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Industry assets reach record high as outflows slow

Thursday 25 August 2016

The Investment Association’s monthly statistics of UK investor behaviour in July 2016 show:

  • Funds under management at record high of £989 billion
  • Funds under management rose by £40 billion in July
  • Total sales (retail and institutional combined) were -£506 million
  • Fixed income funds were popular in July with net retail sales of £1.1 billion
  • Equity funds saw an outflow of £2.2 billion
  • Property funds experienced an outflow of £792 million

Guy Sears, Interim Chief Executive of the Investment Association, said:

“Funds under management of UK authorised funds increased by £40 billion in July to reach a record high of £989 billion, a 4% month-on-month increase.

“Although global equity markets initially fell following the EU referendum announcement, they recovered through July to produce positive returns. Bonds rallied and yields fell to record lows as investors sought safe assets and the market expected a rate cut from the Bank of England.

“Net retail sales were negative again in July with an outflow of £1 billion (0.11% of total assets). However, this was markedly lower than the outflow experienced in June. UK retail investors remained cautious as they sold out of equity and property funds, favouring fixed income, mixed-asset and absolute return strategies.”

FUNDS UNDER MANAGEMENT AND NET SALES

Funds Under Management Net Retail Sales Net Institutional Sales
July 2016 £989 billion -£1.0 billion £533 million
July 2015 £927 billion £3.7 billion £2.5 billion

ASSET CLASSES

Fixed Income funds were the best-selling asset class in July with net sales of £1.1 billion.

Money Market funds were the second best-selling with net retail sales of £410 million.

Mixed Asset funds were the third best-selling with net retail sales of £195 million.

Property funds saw a net retail outflow of £792 million.

Equity funds saw the largest net retail outflow of £2.2 billion.

NET RETAIL SALES OF EQUITY FUNDS BY REGION*

Apart from Global equity funds which had an inflow of £172 million, we saw outflows across all other regions in July.

UK equity funds saw the largest outflow of £1.0 billion, followed by European equity funds which had an outflow of £922 million.

North American equity funds and Japanese equity funds had outflows of £206 million and £166 million respectively.

Asian equity funds saw the lowest outflow of £74 million.


Region Net retail sales
in July 2016
Average net retail sales
for previous 12 months
Global £172 million £18 million
Asia -£74 million -£104 million
Japan -£166 million -£3 million
North America
-£206 million £9 million
Europe
-£922 million £48 million
UK
-£1.0 billion £131 million

THE INVESTMENT ASSOCIATION SECTOR RANKINGS

The top five best-selling Investment Association sectors for July 2016 were:

  • 1. Targeted Absolute Return was the best-selling sector with net retail sales of £464 million.
  • 2. £ Corporate Bond with net retail sales of £349 million.
  • 3. Short Term Money Market with net retail sales of £292 million.
  • 4. £ Strategic Bond with net retail sales of £271 million.
  • 5. Global Bonds with net retail sales of £233 million. .

The worst-selling Investment Association sector in July 2016 was the UK All Companies sector with a net retail outflow of £917 million.

Investment Association Sector Ranking in
July 2016
Net Retail Sales
in July 2016
Ranking in
June 2016
Net Retail Sales
in June 2016
Asset Class
Targeted Absolute Return 1 £464 million 2 £220 million Other
£ Corporate Bond 2 £349 million 3
£116 million Fixed Income
Short Term Money Market 3 £292 million 4
£101 million Money Market
£ Strategic Bond 4 £271 million 9
£11 million Fixed Income
Global Bonds 5 £233 million 1
£250 million Fixed Income

RETAIL DISTRIBUTION

In July, gross retail sales for UK fund platforms totalled £7.7 billion, representing a market share of 47.9% (41.4% in July 2015).

Other Intermediaries including UK IFAs and Wealth Managers attracted gross retail sales of £3.9 billion, representing a market share of 24.2% (29.6% in July 2015).

Direct gross retail sales in July were £1.0 billion, representing a market share of 6.3% (10.3% in July 2015).

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 £82 million in July.

Personal Pensions had net sales of £282 million, ISAs (£11 million), whereas we saw net retail outflows in Insurance Bonds (£21 million) and Unwrapped (£190 million).

For the same five fund platforms, funds under management as at the end of July 2016 were £213 billion, compared with £195 billion a year earlier.

ISAs**

In July 2016, 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 £306 million.

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

  • 1. Global (£23 million net sales)
  • 2. Mixed Investment 20-60% Shares (£20 million net sales)
  • 3. Short Term Money Market (£17 million net sales)

FUND OF FUNDS

Funds of funds had net retail sales of £109 million in July 2016.

Funds of funds invested into the same firm’s funds saw net retail sales of £92 million, compared to £17 million in funds of funds that invest externally.

Funds under management for funds of funds were £115 billion at the end of July 2016, accounting for 11.7% of industry funds under management, compared with 11.2 % in July 2015.

TRACKER FUNDS

Tracker funds saw a net retail outflow of £93 million with funds under management of £132 billion as at the end of July 2016. Their overall share of industry funds under management was 12.1%, compared with 10.5% in July 2015.

ETHICAL FUNDS

Net retail sales of ethical funds were £43 million in July 2016. Funds under management were £11.4 billion at the end of July, representing a 1.0% share of industry funds under management.

-ENDS-

For further information, please contact:

Alex Hogan
Press & Digital Media Officer
Alex.Hogan@theia.org
T +44 (0)20 7269 4620
M +44 (0)7508 724 066

Notes for Editors

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.

* Regional breakdown for equity funds

The following Investment Association sectors have been grouped together to compile the figures for regional equity sales:

Asia Europe Global Japan North America UK
Asia Pacific excl. Japan Europe Excl. UK Global Japan North America UK All Companies
Asia Pacific incl. Japan Europe Incl. UK Global Emerging Markets Japanese Smaller Companies North America Smaller Companies UK Equity Income
China/Greater China Europe Smaller Companies Global Equity Income UK Smaller Companies
Specialist
Technology and Telecommunications

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 £5.5 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.