Absolute return reclaims top spot in Feb fund flows – IA

Targeted absolute return was the top-selling IA sector in February with net retail sales of £243m, said the Investment Association.

Absolute return reclaims top spot in Feb fund flows - IA


It is the first time it has been the best-selling sector since October 2015. UK Equity Income came in second with net retail sales of £214m. At a total net level, however, UK authorised funds saw retail outflows of £399m in February, but funds under management increased from £843bn in January to £855bn in February.

“Caution was still evident amongst retail investors in February as they reduced their holdings in investment funds amid volatile markets,” said Guy Sears, interim chief executive of the Investment Association. “Outflows were seen across a range of asset classes, but we did see investor appetite for absolute return and equity income products.” 

In terms of geography, Japanese equity funds were the best-selling in February with net retail sales of £78m. Global equity funds were the second best-selling with net retail sales of £61m. The worst-selling Investment Association sector in February 2016 was the UK All Companies sector with a net retail outflow of £218m.

UK and European equity funds had small net outflows of £3m and £67m respectively in February, while North American and Asian equity products experienced larger outflows.

“The big sell-offs in January and subsequent market uncertainty has led investors to take a more cautious approach with their investment decisions in February,” said Adrian Lowcock, head of investing at AXA Wealth. 

“The popularity of targeted absolute return funds in February does highlight that many investors had taken on more risk than they possibly liked. The effects of the financial crisis continue to linger as investors become risk averse very quickly,” added Lowcock. 

“Although the volatility seen in January has gone and markets are more settled than they were at the beginning of the year, there is still a lot to remain cautious about,” Lowcock noted.

Latest Stories