Investors have shunned UK equity funds for the second month running, pulling close to £1bn, as they retreat to fixed income funds.
Equity funds haemorrhaged £609m in July, most of which was from UK-focused funds which suffered £912m worth of redemptions after leaking £1.1bn the month before.
The UK Equity Income sector was the worst selling Investment Association sector with redemptions reaching £435m, spiking from June’s outflows of £327m. It was followed closely by the UK All Companies sector, which shed £364m, while the money pouring out of UK Smaller Companies funds hit £113m.
Overall savers poured £1.6bn into the UK funds market, taking total funds under management to £1.3trn.
Investment Association chief executive Chris Cummings (pictured) said the market maintained “a steady course” in July, which marked the fourth month of consecutive inflows but was down from the £2.2bn invested in June.
Fixed income dominates sales
Bond funds dominated inflows for the third month in a row, amassing £1.8bn in net retail sales.
Global bonds emerged as the best-selling asset class, scooping up inflows of £693m, which was nearly matched by the sterling corporate bond sector with £691m worth of net sales.
Tracker funds and responsible investment funds also sustained their momentum in July, bringing in inflows of £1.4bn and £966m respectively.
Cummings notes that responsible investment funds have “sustained their strong appeal during the coronavirus pandemic” with investors ploughing £1bn into the sector for the third time since April.
At the end of July responsible funds had £34bn in funds under management, 2.7% of the industry’s market share.
Tracker funds have also continued to grow their market share, accounting for 17.8% of the UK funds industry at the end of July with £229bn in assets.
