The IA: Investors ‘wait and see’ in October

by | Dec 3, 2021

Net retail sales of investment funds totalled £1.7 billion in October, the lowest total inflow since September 2020, data published today by the Investment Association (IA) reveals.

Weaker inflows to equity funds of £280 million dragged down net sales for the industry as a whole. The other key findings for October include:

  • Global was the best-selling IA sector in October for the fifth month in a row with strong inflows of £730 million.
  • Responsible Investment fund flows remained strong with £1.5 billion of net retail sales.
  • Funds categorised as ‘Other’ in IA data which includes the Targeted Absolute Return, Volatility Managed, Unclassified sectors, and the newly launched IA Commodity/Natural Resources and Infrastructure sectors was the best-selling asset class with £698 million in net retail sales.
  • Outflows from UK equities (-£661m) and North America (-£180m) were partly offset by inflows to funds investing in Global equities (£586) and Asia (£201) but equity net sales overall were down by £700 million from September.
  • Property funds experienced a fourth consecutive month of inflows, with net retail sales of £17 million.

 

Chris Cummings, Chief Executive of the Investment Association, said: “Building on what we saw in September, a key theme for October appears to be ‘wait and see’ for many savers. Uncertainty around how much, and how fast, interest rates are going to rise to try to ease inflation may be a factor but investors are also feeling the pinch of rising prices and may simply feel less able to put money aside, whether to cash savings or investments. In addition, investors will be keeping an eye on when central banks start to unwind quantitative easing more, which will have an impact on equity valuations. Time will tell how the Omicron variant will impact sales in November and December.” 

Funds Under Management and Net Sales

                                 Funds Under Management  Net Retail Sales  Net Institutional Sales 
October 2021 £1.6 trillion £1.7 billion -£224 million
October 2020 £1.3 trillion £2.5 billion -£8.4 billion

 

Best selling investment association sectors

The five best-selling Investment Association sectors for October 2021 were:

  1.  Global was first with net retail sales of £730 million.
  2. Mixed Investment 40-80% was second with net retail sales of £403 million.
  3. Volatility Managed followed with net retail sales of £387 million.
  4. Asia Pacific Excluding Japan was fourth with net retail sales of £170 million.
  5. Mixed Investment 20-60% Shares was fifth with £139 million.

 

The worst-selling Investment Association sector in October 2021 was UK All Companies, which experienced outflows of £349 million.

Net retail sales by asset class 

Other (which includes the Targeted Absolute Return, Volatility Managed, and Unclassified sectors) was the best-selling asset class in October 2021, with £698 million in net retail sales.

Fixed Income was the second best-selling asset class, with £597 million of inflows.

Mixed Asset funds was the third best-selling asset class again in October, with £578 million of inflows.

Equity funds experienced lower than usual levels of inflows in October, with net retail sales of £280 million.

Property funds saw net retail sales of £17 million, in its fourth consecutive month of inflows.

Money Market funds experienced £437 million of outflows.

Net retail sales of equity funds by region

Global was the best-selling equity fund region in October 2021, with net retail sales of £586 million.

Asia was second with net retail sales of £201 million.

Europe funds experienced net retail inflows of £19 million.

UK, Japan, and North America funds all experienced outflows in October 2021. The UK saw net retail outflows of £661 million, North America funds experienced outflows of £187 million, and Japan funds saw £8 million of outflows.

Tracker funds

Tracker funds saw a net retail inflow of £1.45 billion in October 2021. Tracker funds under management stood at £291 billion as of the end of October. Their overall share of industry funds under management was 18.6%.

Responsible investment funds

Responsible investment funds saw a net retail inflow of £1.5 billion in October 2021. Responsible investment funds under management stood at £88.7 billion as of the end of October. Their overall share of industry funds under management was 5.7%.

Gross retail sales by distribution channel

In October, gross retail sales for UK fund platforms totalled £12.8 billion, representing a market share of 54.1%.

Gross retail sales through Other UK Intermediaries including IFAs were £5.9 billion, representing a market share of 24.8%.

Direct gross retail sales in October were £836 million, representing a market share of 3.5%.

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