Up 12.6% on the previous year, the Investment Association said, fund performance contributed £104bn of this growth, while net sales added £13bn.
“Net retail sales ended the year on a high as retail investors allocated £2.7bn to funds in December,” IA fund market specialist Alastair Wainwright said. “This follows a £1.5bn net retail inflow in November. Net retail sales totalled £4.7bn in 2016 with fixed income and absolute return funds attracting the bulk of inflows.”
Despite ending the year well, net retail sales for the year were still down significantly in 2016 versus the£16.8bn in 2015.
Over the course of the year, the IA targeted Absolute Return sector was once again the best-selling sector with advisers and discretionary wealth managers driving flows into those funds, the association said, while money market funds grew assets by 40% during the year, while tracker funds under management grew by £36bn during the year, now accounting for 13.5% of the UK market.
But, the IA pointed out: “Most of this increase is attributed to high market returns which contributed £31 billion to the growth of funds under management whilst net sales accounted for £5 billion.”
During the year institutional sales rose to £8.3bn, from £5.6bn in 2015.
Chief executive of the IA Chris Cummings said: “Despite a slowdown in net retail sales in what was an extraordinary and challenging geo-political year, the UK asset management industry continued to grow strongly and provide value to investors, savers and pensioners across the world.”
“Funds run by our members for UK investors grew by more than £100 billion in 2016, representing a significant contribution to people’s wealth and pensions, as well as the UK economy as a whole.”
