- April fund sales in ISAs were half the level of last year, according to data released by the Investment Association today.
- Investors seek income, but not in the UK.
- ESG fund flows bounce back.
- Overall fund flows are still weak.
Laith Khalaf, head of investment analysis, AJ Bell: “Investors bought £676 million of funds in ISAs in April, down from £1.4 billion in the same month in 2021. The big drop in fund sales at the height of ISA season can be attributed to weak market sentiment, and the big bulge we saw in contributions last year, when investors reacted positively to the success of COVID vaccines, and chose to invest their pandemic savings in the market.
“Fast forward twelve months, the Ukraine crisis and ensuing inflationary pressures have significantly undermined confidence in the stock market, and will no doubt restrict many people’s ability to save as much as they would like throughout the year.
“The Global Equity Income sector was the best-seller with retail investors for the first time ever. It makes sense that investors are prioritising dividends when growth is more uncertain, but it is perhaps a sign of continued antipathy to the UK stock market that they are spurning the UK Equity Income sector and choosing instead to go global. That’s despite the London Stock Exchange being home to many significant dividend payers.
“While the Global Equity Income sector saw net inflows of £678 million in April, the UK Equity Income sector still saw £31 million of outflows, which is actually one of its better showings in recent times.
“Overall fund sales were modestly positive in April, after three months of outflows, which suggests sentiment isn’t quite as bleak as it was. However, equity fund outflows stood at £435 million in April – the biggest since January – and now total £2.4 billion since the start of the year, which shows that investors are still wary of taking risk. Responsible investment funds had a bright month though, registering £1.2 billion of net fund sales, which is more akin to the large amounts they were raking in last year.”