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Mixed Asset funds ride out market volatility with £1 billion inflow

The Investment Association’s monthly statistics of UK investor behaviour in February 2018 show:

  • UK authorised funds attracted £1.2 billion from retail investors and £2 billion from institutional investors
  • Mixed Asset funds saw a net retail inflow of just over £1 billion, while Equity funds experienced their first outflow since January 2017
  • Funds under management stand at more than £1.2 trillion

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

“UK authorised funds attracted £1.2 billion from retail investors and £2 billion from institutional investors in February despite difficult market conditions. Funds under management fell slightly, due to negative market returns, but still stand at more than £1.2 trillion.”

Alastair Wainwright, Fund Market Specialist, said:

“The old saying, ‘when the US sneezes, the rest of the world catches a cold’, was shown to still be true in February. US markets sold off on 5th February as strong employment figures caused concern that the Federal Reserve will need to raise interest rates higher than expected.

The contagion swiftly moved round world markets with Asian and European bourses all falling significantly. Volatility was also present in bond markets as yields increased, but soon fell, as investors moved quickly to take advantage of the higher yields on offer.

In this context, investors showed more caution allocating to North American and Global equity funds, which saw small outflows. This led to net equity fund sales turning negative for the first time since January 2017, with an outflow of £136 million. However, the largest detractor continues to be UK equity with a £510 million net outflow in February. Investors continued to allocate to Asian, European and Japanese equity funds.

Fixed Income funds also experienced a net outflow in February with negative net sales in the £ Corporate Bond and Global Bond sectors, and, compared to previous months, a smaller net flow into Strategic Bond funds.

Retail sales flows into Mixed Asset funds told a different story, with a net retail inflow of just over £1 billion. Investors in Mixed Asset funds tend to be agnostic to short term market events as asset allocation is in the hands of their fund manager. The last net retail monthly outflow was in January 2016 and within that time period we have seen 11 months where net retail sales exceeded £1 billion.

Interestingly, Tracker funds, whose returns are more sensitive to market volatility, received positive net retail inflows into all asset classes.”

FUNDS UNDER MANAGEMENT AND NET SALES

Funds Under Management Net Retail Sales Net Institutional Sales
February 2018 £1.2 trillion £1.2 billion £2 billion
February 2017 £1.1 trillion £2.3 billion £1.8 billion

ASSET CLASSES

Mixed Asset was the best selling asset class with £1 billion in net retail sales.

Money Market was the second best-selling asset class with £455 million in net retail sales.

Property was the third best-selling asset class with net retail sales of £94 million.

Funds classified as Other experienced a net retail outflow of £59 million - this includes the Targeted Absolute Return, Volatility Managed, Protected and Unclassified sectors.

Equity and Fixed Income also experienced outflows of £136 million and £235 million respectively.

NET RETAIL SALES OF EQUITY FUNDS BY REGION*

Europe funds were the best-selling in February with net retail sales of £216 million.

Asia funds were the next best-selling with net retail sales of £197 million.

Japan funds were the third best-selling with net retail sales of £125 million.

North America and Global funds saw net retail outflows of £31 million and £66 million respectively.

UK funds experienced net retail outflows of £510 million.


Region Net retail sales
in February 2018
Average net retail sales
for previous 12 months
Europe £216 million £298 million

Asia

£197 million £33 million
Japan £125 million £170 million
North America -£31 million £103 million
Global -£66 million £503 million
UK -£510 million -£222 million

THE INVESTMENT ASSOCIATION SECTOR RANKINGS

The five best-selling Investment Association sectors for February 2018 were:
  • £ Strategic Bond was the best-selling sector with net retail sales of £346 million.
  • Mixed Investment 20-60% Shares with net retail sales of £258 million.
  • Mixed Investment 40-85% Shares with net retail sales of £239 million.
  • Europe Excluding UK with net retail sales of £220 million.
  • Asia Pacific Excluding Japan with net retail sales of £183 million.
The worst-selling Investment Association sector in February 2018 was UK Equity Income with an outflow of £306 million.

Investment Association Sector Ranking in February 2018 Net Retail Sales
in February 2018
Ranking in
January 2018
Net Retail Sales
in
January 2018
Asset Class
£ Strategic Bond 1 £346 million 1 £808 million Fixed Income
Mixed Investment 20-60% Shares 2 £258 million 8 £212 million Mixed Asset

Mixed Investment 40-85% Shares

3 £239 million 6 £248 million

Mixed Asset

Europe Excluding UK 4 £220 million 5 £258 million Equity
Asia Pacific Excluding Japan 5 £183 million 7 £234 million

Equity

RETAIL DISTRIBUTION

In February, gross retail sales for UK fund platforms totalled £8.6 billion, representing a market share of 40.4% (46.5% in February 2017).

Other Intermediaries including UK IFAs and Wealth Managers made gross retail sales of £7 billion, representing a market share of 33% (23.4% in February 2017).

Direct gross retail sales in February were £1.5 billion, representing a market share of 6.8% (7.7% in February 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 billion in February.

Personal Pensions had net sales of £740 million, Unwrapped £182 million and ISAs £86 million, whilst Insurance Bonds saw a net inflow of £33 million.

For the same five fund platforms, funds under management as at the end of February 2018 were £256 billion, compared with £234 billion a year earlier.

ISAs**

In February 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 £107 million.

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

  • Global (£33.3 million net sales)
  • Mixed Investment 20-60% Shares (£26.2 million net sales)
  • Mixed Investment 40-85% Shares (£25.4 million net sales)

FUND OF FUNDS

Funds of funds had a net retail inflow of £620 million in February.

Funds of funds that invested externally saw net retail sales of £351 million, while funds that invested internally saw net retail sales of £269 million.

Funds under management for funds of funds were £153 billion at the end of February 2018, accounting for 12.7% of industry funds under management, compared with 12.2% in February 2017.

TRACKER FUNDS

Tracker funds saw a net retail inflow of £796 million. Tracker funds under management stood at £166 billion as at the end of February 2018. Their overall share of industry funds under management was 13.7%, compared with 13.4% in February 2017.

ETHICAL FUNDS

Ethical funds experienced net retail outflows of £1 million in February 2018. Funds under management were £15.2 billion at the end of February, representing a 1.3% share of industry funds under management.

-ENDS-

For further information, please contact:


Anisha Patel, Head of Communications: anisha.patel@theia.org
T +44 (0)20 7269 4635


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 IA champions UK asset management, supporting British savers, investors and businesses. Our 240 members manage £6.9 trillion of assets and employ 93,500 people across the UK.
Our mission is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for
the economy, so everyone prospers.
  • 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.