Savers invested £43.4bn in retail funds in 2021, approaching the record 2017 net retail sales of £48.6bn, data published today by the Investment Association (The IA) reveals. 2021 was a year characterised by continued high inflows to responsible investment funds, outflows from UK equity funds, and an increased appetite for active-style management.
The key findings for 2021 in the fund market show:
- Inflows to responsible investment funds totaled a record £16bn, up £4.3bn on 2020.
- Most inflows in the retail fund market went to active funds in 2021, with active funds pulling £25.2bn, compared to £18.3bn to tracker funds.
- Outflows from UK equity funds reached a record £5.3bn in 2021 – larger than the previous record of £4.9bn in 2016, when the UK voted to leave the European Union.
- Equity, fixed income and mixed asset funds all saw inflows of more than £10bn each, with equity funds being the most popular asset class in 2021 (£14.8bn).
Key findings for December 2021 include:
- December saw net retail sales of £2.3bn, with equity funds being the most popular asset class seeing £1bn of inflows.
- Global remained the best-selling IA sector for the seventh consecutive month, and was the best-selling sector every month of 2021, excluding May.
- Tracker funds outsold active funds in December, with inflows of £1.3bn compared to £930m for active funds.
Chris Cummings(pictured) Chief Executive of the Investment Association said:
“Investors put their lockdown savings to work in 2021, with near record inflows to retail funds in 2021 helping investors take part in the global Covid-19 market bounce-back. This was particularly so in the first half of the year, when monthly inflows into funds peaked at £6.2bn at the end of the 2021 ISA season in April. While new variants of Covid-19 appeared throughout the year, every month of 2021 saw net inflows – against a backdrop of rising prices eroding the value of saving in cash.
“The return of significant inflation in the second half of 2021 indeed left its mark, with falling flows into bond funds, but overall investor confidence remained resilient. Growing focus on climate change in the year Glasgow hosted COP26 also helped take flows into responsible investment funds to new heights.”
FUNDS UNDER MANAGEMENT AND NET SALES
|Funds Under Management||Net Retail Sales||Net Institutional Sales|
|December 2021||£1.6 trillion||£2.3 billion||-£943 million|
|December 2020||£1.4 trillion||£6.2 billion||£4.8 billion|
BEST SELLING INVESTMENT ASSOCIATION SECTORS
The five best-selling Investment Association sectors for December 2021 were:
- Global with net retail sales of £834 million.
- Short Term Money Market was second with net retail sales of £557 million.
- Mixed Investment 40-85% Shares followed with net retail sales of £366 million.
- Volatility Managed was fourth with net retail sales of £354 million.
- North America was fifth with £291 million.
The worst-selling Investment Association sector in December 2021 was UK All Companies, which experienced outflows of £781 million.
NET RETAIL SALES BY ASSET CLASS
Equity funds was the best-selling asset class in December 2021, with £1 billion in net retail sales.
Money Market funds was the second best-selling asset class, with £572 million of inflows.
Fixed Income funds was the third best-selling asset class in December 2021, with £288 million of inflows.
Other (which includes the Targeted Absolute Return, Volatility Managed, and Unclassified sectors) was fourth with inflows of £237 million.
Mixed Asset funds was the fifth best-selling asset class in December 2021, with £62 million of inflows.
Property funds saw £62 million of inflows.
NET RETAIL SALES OF EQUITY FUNDS BY REGION*
Global was the best-selling equity fund region in December 2021, with net retail sales of £1 billion.
North America was second with net retail sales of £307 million.
Europe was third with net retail sales of £127 million.
Japan was forth with net retail sales of £77 million.
Asia and UK funds both experienced outflows in December 2021. Asia saw net retail outflows of £62 million and UK funds saw £899 million of outflows.
Tracker funds saw a net retail inflow of £1.3 billion in December 2021. Tracker funds under management stood at £298 billion as of the end of December. Their overall share of industry funds under management was 18.8%.
RESPONSIBLE INVESTMENT FUNDS
Responsible investment funds saw a net retail inflow of £1.2 billion in December 2021. Responsible investment funds under management stood at £89 billion as of the end of December. Their overall share of industry funds under management was 5.6%.
GROSS RETAIL SALES BY DISTRIBUTION CHANNEL
In December, gross retail sales for UK fund platforms totalled £12 billion, representing a market share of 50.8%.
Gross retail sales through Other UK Intermediaries including IFAs were £6 billion, representing a market share of 25.3%.
Direct gross retail sales in December were £891 million, representing a market share of 3.8%.