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Targeted Absolute Return best-selling sector for fourth consecutive month

Friday 3 March January 2017

The Investment Association’s statistics of UK investor behaviour in January 2017 show:

  • Total net retail sales of £366 million in January
  • Targeted Absolute Return was the top-selling sector with net retail sales of £297 million
  • Mixed asset was the best-selling asset class with net retail sales of £428 million
  • Equity funds experienced an outflow of £697 million in January

Chris Cummings, Chief Executive of the Investment Association, said:

“2016 finished with a flourish as December recorded the highest net retail sales for the year, so it is not surprising to see sales were somewhat subdued in January. UK investors particularly looked to the industry to provide them with targeted risk managed solutions and asset allocation.”

Alastair Wainwright, Fund Market Specialist, said:

“In what was a quiet month for fund flows, Mixed Asset was the best-selling asset class in January with £428 million in net retail flows. The Mixed Investment 40-85% Shares sector was the best-selling mixed-asset sector attracting £175 million of retail investor money.

“For the fourth month in a row Targeted Absolute Return was the best-selling sector, largely due to discretionary fund managers allocating to the sector. Sterling Strategic Bond was the second best-selling sector as, with the exception of a small outflow through the Direct sales channel, it received positive net sales through all retail distribution channels.

“The momentum of inflows into equity funds toward the end of 2016 did not carry through to the New Year. UK and European equity funds were once again worst hit with net retail outflows of £505 million and £399 million respectively. Global and North American focused funds were the only positive equity regions in January as investors sought to take advantage of the “Trump Trade” and the new administration’s expected relaxation of regulation in the US.”


FUNDS UNDER MANAGEMENT AND NET SALES

Funds Under Management Net Retail Sales Net Institutional Sales
January 2017 £1.0 trillion £366 million £994 million
January 2016 £900 billion -£1.3 billion £32 million

ASSET CLASSES

Mixed asset was the best-selling asset class in January 2017, with net retail sales of £428 million.

Fixed income funds were the second best-selling with net retail sales of £231 million.

Property and money market funds both experienced small net retail outflows of £58 million and £70 million respectively.

Equity funds saw a larger outflow of £697 million, representing the first outflow since October last year.

NET RETAIL SALES OF EQUITY FUNDS BY REGION*

Global equity funds were the best-selling in January with net retail sales of £225 million.

North American equity funds were the next best-selling with net retail sales of £98 million.

Japanese equity funds saw a net retail outflow of £20 million, while Asian equity funds had an outflow of £121 million.

European and UK equity funds saw larger outflows of £399 million and £505 million respectively.


Region Net retail sales
in January 2017
Average net retail sales
for previous 12 months
Global £225 million £233 million
North America
£98 million -£33 million
Japan -£20 million -£76 million
Asia
-£121 million -£79 million
Europe
-£399 million -£297 million
UK
-£505 million -£408 million

THE INVESTMENT ASSOCIATION SECTOR RANKINGS

The top five best-selling Investment Association sectors for January 2017 were:

  • 1. Targeted Absolute Return was the best-selling sector with net retail sales of £297 million.
  • 2. £ Strategic Bond with net retail sales of £229 million.
  • 3. Mixed Investment 40-85% Shares with net retail sales of £175 million.
  • 4. Specialist with net retail sales of £104 million.
  • 5. Flexible Investment with net retail sales of £81 million.

The worst-selling Investment Association sector in January 2017 was the UK All Companies sector with an outflow of £408 million.

Investment Association Sector Ranking in Jan
2017
Net Retail Sales
in Jan 2017
Ranking in
Dec 2016
Net Retail Sales
in Dec 2017
Asset Class
Targeted Absolute Return 1 £297 million 1 £422 million Other
£ Strategic Bond 2 £229 million 3
£264 million Fixed Income
Mixed Investment 40-85% Shares
3 £175 million 4
£217 million Mixed Asset
Specialist
4 £104 million 6
£151 million Equity
Flexible Investment 5 £81 million 12
£68 million Mixed Asset

RETAIL DISTRIBUTION

In January, gross retail sales for UK fund platforms totalled £7.3 billion, representing a market share of 48.2% (45.7% in January 2016).

Other Intermediaries including UK IFAs and Wealth Managers attracted gross retail sales of £4.0 billion, representing a market share of 26.0% (21.8% in January 2016).

Direct gross retail sales in January were £829 million, representing a market share of 5.4% (12.1% in January 2016).

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 £661 million in January.

Personal Pensions had net sales of £600 million, Unwrapped £127 million, and Insurance Bonds and ISAs saw outflows of £17 million and £49 million respectively.

For the same five fund platforms, funds under management as at the end of January 2017 were £231 billion, compared with £193 billion a year earlier.

ISAs**

In January 2017, 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 £339 million.

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

  • 1. Mixed Investment 40-85% Shares (£16 million net sales)
  • 2. Specialist (£15 million net sales)
  • 3. Mixed Investment 20-60% Shares (£11 million net sales)

FUND OF FUNDS

Funds of funds had a net retail inflow of £370 million in January 2017.

Funds of funds that invested externally saw net retail sales of £243 million, while funds that invested internally saw net retail sales of £127 million.

Funds under management for funds of funds were £124 billion at the end of January 2017, accounting for 11.9% of industry funds under management, compared with 11.4 % in January 2016.

TRACKER FUNDS

Tracker funds saw a net retail inflow of £320 million. Tracker funds under management stood at £143 billion as at the end of January 2017. Their overall share of industry funds under management was 13.6%, compared with 11.4% in January 2016.


ETHICAL FUNDS

Net retail sales of ethical funds were £70 million in January 2017. Funds under management were £12.4 billion at the end of January, representing a 1.2% share of industry funds under management.

-ENDS-

For further information, please contact:


Alex Hogan
Communications Manager
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 £5.7 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.