European equities back in favour with UK investors

Investment Association

5 min read06 July 2017

The Investment Association have released their monthly statistics for UK investor behaviour for May 2017

The Investment Association's monthly statistics of UK investor behaviour in May 2017 show:

Net retail sales were the fourth highest on record at £3.6 billion
Equity funds received a net retail inflow of over £1 billion
The best selling sector was Sterling Strategic Bond with a £392 million inflow
European equities recorded their largest monthly inflow since September 2015

Chris Cummings, Chief Executive of the Investment Association, said:

"Retail investors allocated £3.6 billion to funds managed by our members in May, making this the fourth best-selling month on record for net retail sales. In the year to the end of May, £15.3 billion of new retail money has been invested within the UK asset management industry."

Alastair Wainwright, Fund Market Specialist, said:

"For the third month in a row, all asset classes have received positive net retail flows. UK retail investors allocated £1 billion to equity, with Global equity funds once again receiving the majority of net equity flows and having the best-selling fund in this month.

European equities recorded their largest monthly inflow since September 2015 as financial markets on the continent have improved following political and economic developments. Europe ex UK received a net retail inflow of £290 million and European Smaller Companies took in £42 million. The much smaller Europe inc UK sector took in £11 million.

Mixed asset and fixed income funds received £986 million and £931 million respectively. Both the Mixed Investment 20-60% Shares and 40-85% Shares sectors received over £200 million in May and the majority of these flows came through fund platforms. Within fixed income, Sterling Strategic Bond was the best-selling sector and all fixed income sectors recorded positive net retail inflows.

Passively managed funds received £997 million of new retail investor money in May. Equity passives took in £542 million, Mixed Asset and Fixed Income passives achieved net retail inflows of £257 million and £122 million respectively."

ASSET CLASSES

Equity was the best-selling asset class in May 2017, with net retail sales of £1 billion.

Mixed asset was the second best-selling with net retail sales of £986 million.

Fixed income was the third best-selling asset class with net retail sales of £931 million.

Money Market funds and Property funds saw inflows of £275 million and £56 million respectively.

NET RETAIL SALES OF EQUITY FUNDS BY REGION

Global equity funds were the best-selling in May with net retail sales of £699 million.

European equity funds were the second best-selling with net retail sales of £343 million.

Japanese equity funds were the third best-selling with net retail sales of £261 million.

UK equity funds experienced a net retail outflow of £479 million.

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

£ Strategic Bond was the best-selling sector with net retail sales of £392 million.
Global with net retail sales of £292 million.
Europe excluding UK with net retail sales of £290 million.
Japan with net retail sales of £251 million.
£ Corporate Bond with net retail sales of £230 million.

The worst-selling Investment Association sector in May 2017 was the UK All Companies sector with an outflow of £532 million.

RETAIL DISTRIBUTION

In May, gross retail sales for UK fund platforms totalled £9 billion, representing a market share of 47% (50.7% in May 2016).

Other Intermediaries including UK IFAs and Wealth Managers attracted gross retail sales of £4.4 billion, representing a market share of 23.2% (21.2% in May 2016).

Direct gross retail sales in May were £1.2 billion, representing a market share of 6.4% (7.5% in May 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 £1.5 billion in May.

Personal Pensions had net sales of £1.2 billion, ISAs £413 million, and Unwrapped £94 million, whilst Insurance Bonds saw net outflows of £214 million.

For the same five fund platforms, funds under management as at the end of May 2017 were £236 billion, compared with £202 billion a year earlier.

ISAs

In May 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 sales of £210 million.

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

Mixed Investment 20-60% Shares (£60 million net sales)
Global (£46.7 million net sales)
Mixed Investment 40-85% Shares (£45.8 million net sales)

FUND OF FUNDS

Funds of funds had a net retail inflow of £651 million in May 2017.

Funds of funds that invested externally saw net retail sales of £235 million, while funds that invested internally saw net retail sales of £416 million.

Funds under management for funds of funds were £140 billion at the end of May 2017, accounting for 12.6% of industry funds under management, compared with 11.9% in May 2016.

TRACKER FUNDS

Tracker funds saw a net retail inflow of £997 million. Tracker funds under management stood at £154 billion as at the end of May 2017. Their overall share of industry funds under management was 13.9%, compared with 11.4% in May 2016.

ETHICAL FUNDS

Net retail sales of ethical funds were £68 million in May 2017. Funds under management were £13.9 billion at the end of May, representing a 1.2% share of industry funds under management.