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Low net retail sales reflect continued uncertainty

Thursday 02 August 2018

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


  • Net retail sales were positive in June with an additional £840 million invested into UK authorised funds, and funds under management totalling £1.2 trillion
  • Global was the best-selling sector in June with £291 million net retail sales
  • Europe and UK equity funds each experienced net retail outflows of £280 million

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

“Brexit uncertainty continues to weigh on investors with UK equities facing a further month of outflows. As we approach the deadline for the UK leaving the EU both sides must commit to building a framework that delivers prosperity for the millions of savers in the UK and Europe.”

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

“Net retail sales were £840 million in June, the lowest in 18 months amidst a continued uncertain political landscape and the possibility of a trade war. In this context, the North American Smaller Companies and North America sectors were the best performing in June, returning 1.7% and 1.3% respectively, whilst China was the worst performing sector with a 4.1% loss.

The Global equity sector, which has a high proportion of US exposure, was the best-selling sector (£291 million) and North America (£243 million) third best-selling sector. The Mixed Investment 40-85% Shares sector was second best-selling at £272 million.

Passive funds’ increased market share from 13.2% in April to 14.1% in June, was due to the IA receiving sales and FUM data for a significant number of large index tracker funds which we didn’t previously report. This increase in passive FUM led to a slight decrease in fund of fund’s market share, which has dropped from 12.9% to 12.4%.”

FUNDS UNDER MANAGEMENT AND NET SALES

Funds Under Management Net Retail Sales Net Institutional Sales
June 2018 £1.2 trillion £840 million -£1.5 billion
June 2017 £1.1 trillion £3.2 billion £1.3 billion

ASSET CLASSES

Mixed Asset was the best-selling asset class with £430 million in net retail sales.

Money Market was the second best-selling asset class with net retail sales of £273 million.

Funds classified as Other were the third-selling asset class with £271 million in net retail sales. This includes the Targeted Absolute Return, Volatility Managed, Protected and Unclassified sectors.

Equity and Property experienced inflows of £120 million and £73 million respectively.

Fixed Income experienced a net retail outflow of £327 million.

NET RETAIL SALES OF EQUITY FUNDS BY REGION*

North America funds were the best-selling in June with net retail sales of £273 million.

Global funds were the next best-selling with net retail sales of £110 million.

Japan funds were the third best-selling with net retail sales of £102 million.

Asia funds saw net retail inflows of £9 million.

Europe and UK funds each experienced net retail outflows of £280 million.


Region Net retail sales
in June 2018
Average net retail sales
for previous 12 months
North America £273 million £135 million

Global

£110 million £371 million
Japan £102 million £161 million
Asia £9 million £109 million
Europe
-£280 million £260 million
UK
-£280 million -£443 million

THE INVESTMENT ASSOCIATION SECTOR RANKINGS

The five best-selling Investment Association sectors for June 2018 were:
  • Global was the best-selling sector with net retail sales of £291 million.
  • Mixed Investment 40-85% Shares with net retail sales of £272 million.
  • North America with net retail sales of £243 million.
  • Volatility Managed with net retail sales of £149 million.
  • Targeted Absolute Return with net retail sales of £143 million.
The worst-selling Investment Association sector in June 2018 was £ Strategic Bond with an outflow of £413 million.

Investment Association Sector Ranking in June
2018
Net Retail Sales
in June 2018
Ranking in
June 2018
Net Retail Sales
in
June 2018
Asset Class
Global 1 £291 million2 £347 million Equity

Mixed Investment 40-85% Shares

2 £272 million 3 £191 million Mixed Asset

North America

3 £243 million 4 £172 million Equity
Volatility Managed 4 £149 million 7 £138 million Other
Targeted Absolute Return 5 £143 million 1 £516 millionOther

RETAIL DISTRIBUTION

In June, gross retail sales for UK fund platforms totalled £9.2 billion, representing a market share of 42.5% (44% in June 2017).

Other Intermediaries including UK IFAs made gross retail sales of £6.6 billion, representing a market share of 30.6% (25.3% in June 2017).

Direct gross retail sales in May were £1.1 billion, representing a market share of 5.1% (6.3% in June 2017).

FUND PLATFORM PRODUCT SALES

The five fund platforms that provide data to The Investment Association (AEGON, Fidelity, Hargreaves Lansdown, Old Mutual Wealth and Transact) saw net retail sales of £973 million in June.

Personal Pensions had net sales of £727 million, ISAs £168 million, Unwrapped £76 million, while Insurance Bonds saw a net inflow of £3 million.

For the same five fund platforms, funds under management as at the end of June 2018 were £277 billion, compared with £247 billion a year earlier.

ISAs**

In June 2018, funds in ISAs provided by fund companies and the five fund platforms that feed data to The Investment Association (AEGON, Fidelity, Hargreaves Lansdown, Old Mutual Wealth and Transact) saw a net retail outflow of £56 million.

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

  • Global (£88.3 million net sales)
  • Mixed Investment 20-60% Shares (£40.8 million net sales)
  • Mixed Investment 40-85% Shares (£37.3 million net sales)

FUND OF FUNDS

Funds of funds had a net retail inflow of £662 million in June.

Funds of funds that invested externally saw net retail sales of £342 million, while funds that invested internally saw net retail sales of £320 million.

Funds under management for funds of funds were £152 billion at the end of June 2018, accounting for 12.4% of industry funds under management, compared with 12.6% in June 2017.

TRACKER FUNDS

Tracker funds saw a net retail inflow of £420 million. Tracker funds under management stood at £174 billion as at the end of June 2018. Their overall share of industry funds under management was 14.1%, compared with 13.1% in June 2017.

ETHICAL FUNDS

Ethical funds experienced net retail inflows of £101 million in June 2018. Funds under management were £16 billion at the end of June, 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 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 (AEGON, 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.