Investors heaped fresh pain on active managers in September after ploughing money into tracker funds, according to the latest Investment Association statistics.
In total, £1.1bn was invested in index-tracking products during the month, a £379m jump from August when net retail sales were £736m.
These inflows are on a par with September last year and January this year when investors put £1.2bn and £1bn respectively into tracker products.
Tracker funds under management stood at £194bn at the end of September, accounting for 15.4% of overall industry funds under management, compared with 14.5% in September 2017.
Laura Suter, personal finance analyst at investment platform AJ Bell, said: “Tracker funds saw the biggest inflows, with a whopping £1.1bn being invested in them in the month. These tracker inflows are on par with a year ago, despite overall net sales having fallen almost 90%.”
The news won’t be welcomed by active managers who have been struggling to hold onto assets. According to Morningstar data, investors pulled more than $86bn (£67bn) from active managers globally in the third quarter.
Uncertainty is a driving factor
Elsewhere, the IA statistics showed overall net retail sales were positive in September, with £642m of inflows from UK authorised and recognised funds, and funds under management totalling £1.3trn.
Mixed investment 40-85% Shares was the best-selling sector with £268m of net inflows. This was followed by Global with £236m of net inflows. The worst-selling was UK All Companies which shed £391m over the month.
European equities suffered outflows for the fifth month in a row as £58m left the asset class.
Chris Cummings, chief executive of the Investment Association, said: “Uncertainty continues to be a driving factor for investors, with global and mixed asset funds benefiting, as savers look to diversify and manage their risk. September saw net retail sales bounce back into positive figures, however UK equities continue to remain firmly out of favour, with European equities experiencing a fifth consecutive month of outflows.”
Focus on global exposure
Suter said investors favoured global funds as a lack of deal on Brexit put them off investing in UK equity funds, from which £329m was pulled during the month.
She added: “Investors are instead focusing on global equity markets and gaining a slice of the growing US economy, with global funds seeing the largest inflows at £236m and North American focused funds attracting £204m of new money. Japanese funds also benefitted, with £129m of new inflows, while most other countries saw outflows.”
