Equity fund sales bounce back in November 2016

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

  • Net retail sales of equity funds of £583 million in November – the first time they have been positive in 2016.
  • Total net retail fund sales were £1.5 billion in the month.
  • Tracker fund net retail sales were £1.2 billion.
  • Net retail outflow of £202 million from fixed income funds.

Chris Cummings, Chief Executive of the Investment Association, said: “UK investors were tempted back into equity funds in November. We saw positive flows into UK equities for the first time in 2016, which helped November to record the second highest monthly inflow of the year. The long period of uncertainty global markets have faced through the US election cycle also came to end with Donald Trump’s unexpected win.”

Alastair Wainwright, Fund Market Specialist, said: “UK investors reversed the trend of 2016 and bought into equity funds in November, following ten consecutive months of outflows from equity products. Global funds continued to be most popular amongst equity investors, however, UK equity funds also recorded their first positive monthly flow of the year. Investor sentiment toward UK equities has a significant impact on overall sales figures as UK equity funds account for 22% of total industry funds under management and 40% of equity funds under management.

“Overall, we saw 2016’s second highest level of monthly net retail sales at £1.5 billion. Mixed asset funds continue to be popular with financial advisers and recorded their highest net monthly inflow of the year. Fixed income funds, which have been the driver of positive flows so far this year, experienced a net retail outflow for the first time since February.

“Tracker funds also attracted significant flows, the second highest monthly inflow on record. Equity trackers took in the largest share of net retail flows, £911 million. No single region stood out as UK, US, Japanese and Global tracker funds all experienced strong sales.”

FUNDS UNDER MANAGEMENT AND NET SALES

Funds Under Management Net Retail Sales Net Institutional Sales
November 2016 £1.0 trillion           £1.5 billion                £1.8 billion
November 2015 £918 billion £718 million            -£212 million

ASSET CLASSES

Mixed asset was the best-selling asset class in November 2016, with net retail sales of £634 million.

Equity funds were the second best-selling with net retail sales of £583 million.

Property and money market funds, however, both experienced small net retail outflows of £5 million and £18 million respectively.

Fixed income funds saw an outflow of £202 million, representing the first outflow since February 2016.

NET RETAIL SALES OF EQUITY FUNDS BY REGION

Global equity funds were the best-selling in November with net retail sales of £420 million.

North American equity funds were the next best-selling with net retail sales of £244 million.

UK equity funds saw their first inflow of 2016, with net retail sales of £114 million.

Japanese equity funds were the fourth best-selling with net retail sales of £107 million.

Asian and European equities, however, saw outflows of £147 million and £165 million respectively.

Region Net Retail Sales
in November 2016
Average net retail sales
for previous 12 months
 Global    £420 million       £135 million
 North America £244 million           -£57 million
 UK           £114 million       -£326 million
 Japan               £107 million -£74 million
 Asia              -£147 million                  -£68 million
 Europe       -£165 million             -£219 million

THE INVESTMENT ASSOCIATION SECTOR RANKINGS

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

  • Targeted Absolute Return was the best-selling sector with net retail sales of £366 million.
  • Global with net retail sales of £220 million.
  • Mixed Investment 40-85% Shares with net retail sales of £183 million.
  • North America with net retail sales of £168 million.
  • Mixed Investment 0-35% Shares with net retail sales of £155 million.

The worst-selling Investment Association sector in November 2016 was the £ Corporate Bond sector with an outflow of £166 million.

Investment Association Sector Ranking in
Nov 2016
Net retail sales
in Nov 2016
Ranking
in Oct 2016
Net retail sales
in Oct 2016
Asset Class
Targeted Absolute Return 1 £366 million 1 £426 million Other
Global 2 £220 million 2 £391 million Equity
Mixed Investment 40-85% Shares 3 £183 million 8 £111 million Mixed Asset
North America 4 £168 million 34 -£224 million Equity
Mixed Investment 0-35% Shares 5 £155 million 9 £94 million Mixed Asset

 

RETAIL DISTRIBUTION

In November, gross retail sales for UK fund platforms totalled £8.1 billion, representing a market share of 45.7% (46.9% in November 2015).

Other Intermediaries including UK IFAs and Wealth Managers attracted gross retail sales of £4.0 billion, representing a market share of 22.3% (25.6% in November 2015).

Direct gross retail sales in November were £2.0 billion, representing a market share of 11.4% (6.3% in November 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 £620 million in November.

Personal Pensions had net sales of £440 million, Unwrapped £223 million, and ISAs and Insurance Bonds saw outflows of £21 million and £22 million respectively.

For the same five fund platforms, funds under management as at the end of November 2016 were £219 billion, compared with £199 billion a year earlier.

ISAs

In November 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 £227 million.

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

  • Mixed Investment 40-85% Shares (£22 million net sales);
  • Mixed Investment 20-60% Shares (£18 million net sales); and
  • Targeted Absolute Return (£11 million net sales)

FUND OF FUNDS

Funds of funds had a net retail inflow of £435 million in November 2016.

Funds of funds that invested internally saw net retail sales of £219 million, while funds that invested externally saw net retail sales of £215 million.

Funds under management for funds of funds were £119 billion at the end of November 2016, accounting for 11.7% of industry funds under management, compared with 11.5 % in November 2015..

TRACKER FUNDS

Tracker funds saw a net retail inflow of £1.2 billion, the second highest monthly inflow on record (the highest was in June 2013 when we saw sales of £1.9 billion). Tracker funds under management stood at £136 billion as at the end of November 2016. Their overall share of industry funds under management was 13.4%, compared with 11.5% in November 2015.

ETHICAL FUNDS

Net retail sales of ethical funds were £44 million in November 2016. Funds under management were £12.0 billion at the end of November, representing a 1.2% share of industry funds under management.