Funds industry experiences highest level of half yearly net sales on record

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

  • Funds under management now stand at £1.1 trillion
  • UK retail investors placed £18.4 billion in UK funds in H1 2017
  • All asset classes experienced positive net retail investor flows in H1 2017

Chris Cummings, Chief Executive of the Investment Association, said: “The first half of 2017 was a record breaking period for the funds industry as retail investors placed £18.4 billion in UK authorised funds. This is the highest level of net sales in the first half of any year on record. Funds under management increased by £58 billion in the year to end of June, to £1.1 trillion.”

Alastair Wainwright, Fund Market Specialist, said: “So far, 2017 has been an extraordinary year for the UK funds industry as investors seem to have returned from their 2016 hiatus. Net retail sales were once again strong in June, reaching £2.9 billion. Over the last six months, retail and institutional net sales into UK authorised funds totalled £28.7 billion.

There were positive net retail investor flows into all asset classes in the first half of 2017. Mixed Asset funds attracted the highest flows with £5.7 billion, Fixed Income funds took in £4.2 billion and Equity funds rebounded from a negative 2016 with a net retail inflow of £4.1 billion.

Targeted Absolute return continued its reign as the most popular individual sector for retail investors with a net inflow of £2.2 billion over the last six months. The £ Strategic Bond sector attracted £1.8 billion and Global equity sales were £1.6 billion.

The UK equity sectors were least popular so far this year as investors preferred non-sterling denominated equity funds. June was particularly bad as retail investors extracted £1.1 billion across the three UK equity sectors.

Passive funds received a net retail inflow of £5.8 billion over the last six months. Equity passive products were most popular with £2.9 billion in net retail sales, followed by Mixed Asset passives that brought in £1.7 billion of new retail money.”

FUNDS UNDER MANAGEMENT AND NET SALES

Funds Under Management Net Retail Sales Net Institutional Sales
June 2017 £1.1 trillion           £2.9 billion                £1 billion
June 2016 £949 billion     -£3 billion                   £1 billion

ASSET CLASSES

Fixed Income was the best-selling asset class in June 2017, with net retail sales of £1 billion.

Mixed Asset was the second best-selling with net retail sales of £905 million.

Money Market funds was the third best-selling asset class with net retail sales of £237 million.

Equity saw inflows of £166 million, while Property funds saw outflows of £2 million.

NET RETAIL SALES OF EQUITY FUNDS BY REGION*

Global equity funds were the best-selling in June with net retail sales of £707 million.

European equity funds were the second best-selling with net retail sales of £209 million.

Japanese equity funds were the third best-selling with net retail sales of £168 million.

UK equity funds experienced a net retail outflow of £1.1 billion.

Region Net Retail Sales
in June 2017
Average net retail sales
for previous 12 months
Global    £707 million           £428 million
Europe    £209 million                   -£221 million
Japan                 £168 million               £7 million
North America                      £137 million £36 million
Asia                 -£125 million                      -£77 million
UK       -£1.1 billion                 -£317 million

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

  1. Global was the best-selling sector with net retail sales of £465 million.
  2. Targeted Absolute Return with net retail sales of £447 million.
  3. £ Strategic Bond excluding UK with net retail sales of £363 million.
  4. Global Emerging Markets Bond with net retail sales of £309 million.
  5. Mixed Investment 40-80% Shares with net retail sales of £226 million.

The worst-selling Investment Association sector in June 2017 was the UK All Companies sector with an outflow of £486 million.

Investment Association Sector Ranking
in June 2017
Net retail sales
in June 2017
Ranking
in May 2017
Net retail sales
in May 2017  
Asset Class
Global 1 £465 million 3 £292 million  Equity
Targeted Absolute Return 2 £447 million 2 £387 million Other
£ Strategic Bond 3 £363 million 1 £392 million Fixed Income
Global Emerging Markets Bond 4 £309 million 20 £57 million Fixed Income
Mixed Investment 40-85% Shares 5 £226 million 8 £211 million Mixed Asset

RETAIL DISTRIBUTION

In June, gross retail sales for UK fund platforms totalled £9 billion, representing a market share of 45.4% (48.1% in June 2016).

Other Intermediaries including UK IFAs and Wealth Managers attracted gross retail sales of £4.7 billion, representing a market share of 23.6% (24% in June 2016).

Direct gross retail sales in June were £1 billion, representing a market share of 5.3% (8.5% in June 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 £879 million in June.

Personal Pensions had net sales of £436 million, ISAs £254 million, and Unwrapped £186 million, whilst Insurance Bonds saw net inflows of £3 million.

For the same five fund platforms, funds under management as at the end of June 2017 were £247 billion, compared with £204 billion a year earlier.

ISAs**

In June 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 net retail inflows of £55 million.

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

  1. Global (£47.5 million net sales)
  2. Mixed Investment 20-60% Shares (£45.2 million net sales)
  3. Mixed Investment 40-85% Shares (£36.3 million net sales)

FUND OF FUNDS

Funds of funds had a net retail inflow of £800 million in June 2017.

Funds of funds that invested externally saw net retail sales of £326 million, while funds that invested internally saw net retail sales of £474 million.

Funds under management for funds of funds were £140 billion at the end of June 2017, accounting for 12.8% of industry funds under management, compared with 11.9% in June 2016.

TRACKER FUNDS

Tracker funds saw a net retail inflow of £1.1 billion. Tracker funds under management stood at £153 billion as at the end of June 2017. Their overall share of industry funds under management was 13.9%, compared with 12.7% in June 2016.

ETHICAL FUNDS

Net retail sales of ethical funds were £46 million in June 2017. Funds under management were £13.7 billion at the end of June, representing a 1.2% share of industry funds under management.