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Fixed Income tops the asset classes with £1.6 billion of net retail inflows

Thursday 08 March 2018

The Investment Association’s monthly statistics of UK investor behaviour in January 2018 show:
  • Retail investors allocated £3.7 billion and institutional investors £539 million into UK authorised funds
  • January saw positive inflows into the three main asset classes; Fixed Income led the way again with a £1.6 billion net retail inflow
  • UK investors continued looking for global diversification in their investments with Global being the best-selling Equity sector with net retail sales of £675 million

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

“The new year started with the strong inflows seen throughout 2017. Retail investors allocated £3.7 billion and institutional investors £539 million into UK authorised funds bringing funds under management to just over £1.2 trillion in January 2018.”

Alastair Wainwright, Fund Market Specialist of the Investment Association, said:

“January saw positive inflows into the three main asset classes. Fixed Income led the way again with a £1.6 billion net retail inflow, followed by Equity with £977 million and Mixed Asset attracted £941 million of new retail investor money.

Net retail sales for passive funds were £861 million with a clear preference for passive Equity funds that saw net retail sales of £533 million.

UK investors continued looking for global diversification in their investments with Global notching up £675 million of net retail sales, making it the best selling Equity sector in January. Sterling Strategic Bond was the best-selling sector altogether attracting £808 million. Flows into fixed income products may seem at odds with expected rate rises in the UK, however, sterling strategic bond funds are able to invest globally and hedge currency exposure, therefore, they are not necessarily taking on UK interest rate risk.

Looking at retail distribution, we have been seeing a slow but steady reduction in Fund Platforms’ dominance throughout the past year. Their market share in January 2018 was 37% of gross sales, which was notably lower than their 46% share a year ago. At the same time, the financial adviser market share has increased from 27% in January 2017 to 36% in January 2018. A number of factors may be driving this shift such as non-advised investors turning to financial advisers or advisers moving off platforms and investing directly with fund managers.”

FUNDS UNDER MANAGEMENT AND NET SALES

Funds Under Management Net Retail Sales Net Institutional Sales
January 2018 £1.2 trillion £3.7 billion £539 million
January 2017 £1.1 trillion £696 million £1.3 billion

ASSET CLASSES

Fixed Income was the best selling asset class with £1.6 billion in net retail sales.

Equity was the second best-selling asset class with £977 million in net retail sales.

Mixed Asset was the third best-selling asset class with net retail sales of £941 million.

Funds classified as Other was the fourth best-selling asset class with net retail sales of £298 million - this includes the Targeted Absolute Return, Volatility Managed, Protected and Unclassified sectors.

Property funds experienced an inflow of £76 million. Money Market experienced an outflow of £213 million.

NET RETAIL SALES OF EQUITY FUNDS BY REGION*

Global funds were the best-selling in January with net retail sales of £354 million.

Asia funds were the next best-selling with net retail sales of £303 million.

Japan funds were the third best-selling with net retail sales of £295 million.

Europe and North America funds saw net retail sales of £286 million and £118 million respectively.

UK funds experienced net retail outflows of £532 million.

Region Net retail sales
in January 2018
Average net retail sales
for previous 12 months
Global £354 million £491 million

Asia

£303 million -£3 million
Japan £295 million £143 million
Europe £286 million £240 million
North America £118 million £103 million
UK -£532 million -£219 million

THE INVESTMENT ASSOCIATION SECTOR RANKINGS

The five best-selling Investment Association sectors for January 2018 were:
  • £ Strategic Bond was the best-selling sector with net retail sales of £808 million.
  • Global with net retail sales of £675 million.
  • Global Bonds with net retail sales of £415 million.
  • Japan with net retail sales of £273 million.
  • Europe Excluding UK with net retail sales of £258 million.
The worst-selling Investment Association sector in January 2017 was the Specialist sector with an outflow of -£444 million.

Investment Association Sector Ranking in January
2018
Net Retail Sales
in Jan 2018
Ranking in
Dec 2017
Net Retail Sales
in Dec 2017
Asset Class
£ Strategic Bond 1 £808 million 2 £333 million Fixed Income
Global 2 £675 million 1 £383 million Equity
Global Bonds 3 £415 million 8 £158 million Fixed Income
Japan 4 £273 million 9 £154 million Equity
Europe Excluding UK 5 £258 million 3 £277 million Equity

RETAIL DISTRIBUTION

In January, gross retail sales for UK fund platforms totalled £8.3 billion, representing a market share of 36.7% (45.8% in January 2017).

Other Intermediaries including UK IFAs and Wealth Managers made gross retail sales of £8.1 billion, representing a market share of 35.7% (27.4% in January 2017).

Direct gross retail sales in January were £1.6 billion, representing a market share of 6.9% (6.5% in January 2017).

FUND PLATFORM PRODUCT SALES

The five fund platforms that provide data to The Investment Association (Cofunds, Fidelity, Hargreaves Lansdown, Old Mutual Wealth and Transact) saw net retail sales of £1.6 billion in January.

Personal Pensions had net sales of £891 million, Unwrapped £579 million and ISAs £96 million, whilst Insurance Bonds saw a net outflow of £5 million.

For the same five fund platforms, funds under management as at the end of January 2018 were £259 billion, compared with £228 billion a year earlier.

ISAs**

In January 2018, 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 retail outflow of £123 million.

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

  • Global (£44.8 million net sales)
  • Asia Pacific Excluding Japan (£33.7 million net sales)
  • Japan (£28 million net sales)

FUND OF FUNDS

Funds of funds had a net retail inflow of £649 million in January.

Funds of funds that invested externally saw net retail sales of £399 million, while funds that invested internally saw net retail sales of £250 million.

Funds under management for funds of funds were £154 billion at the end of January 2018, accounting for 12.6% of industry funds under management, compared with 12.1% in January 2017.

TRACKER FUNDS

Tracker funds saw a net retail inflow of £861 million. Tracker funds under management stood at £165 billion as at the end of January 2018. Their overall share of industry funds under management was 13.5%, compared with 13.1% in January 2017.

ETHICAL FUNDS

Net retail sales of ethical funds were £150 million in January 2018. Funds under management were £15.6 billion at the end of December, representing a 1.3% share of industry funds under management.

-ENDS-

For further information, please contact:

Victoria Jonson, Interim Head of Communications: victoria.jonson@theia.org
T +44 (0)20 7269 4696

Helen Ayres, Media Relations Manager: helen.ayres@theia.org
T +44 (0)20 7269 4696, M +44 7508 724066

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.