Fundsmith and Liontrust were among the top fund managers for retail sales in the Q2 2019, although gross flows at the former were more than double net flows suggesting people may be taking gains from Terry Smith’s small stable of funds.
Despite the Woodford scandal, UK retail intermediaries took a positive view in the second quarter as June proved to be the best month for net sales, according to the Pridham Report.
In the list of top-10 asset managers by net flows, both Fundsmith and Liontrust maintained fifth and sixth spot with £651m and £636m. Fundsmith also made it to eighth place in to the top 10 managers by gross retail sales.
Chelsea Financial Services managing director Darius McDermott said: “With Fundsmith, there’s only a couple of funds but having £1.5bn gross sales and under half of that as net actually shows that even top performing funds like that do suffer some natural attrition. People probably want to take some of their gains and maybe allocate the new capital to different things.
“But still, it’s still done £1.5bn pounds worth of gross sales and £650m per month of net sales in a quarter which is very, very strong.”
Punching above their weight
The report said Special Situations, run by Anthony Cross (pictured), remains Liontrust’s flagship fund, but bond and mixed asset products, such as Liontrust Sustainable Future Managed, also attracted good inflows during the quarter.
McDermott said: “In my view, the real companies that are doing very well and the stand out net sellers are Royal London, Liontrust and Rathbones, even though they’re not necessarily at the top. To be second in the net sales versus some of those Goliaths is very good performance, as is Liontrust and Rathbones.
“They are a couple of the smaller boutiques that are still punching way above their weight with respect to net sales.”
AJ Bell head of active portfolios Ryan Hughes said the presence of Baillie Gifford and Liontrust shows a commitment to active management still resonates with investors.
Hughes said: “With Liontrust’s recent purchase of Neptune it will be interesting to see if this has any impact on the sales charts in the coming quarters. Allianz are building a strong fixed interest franchise under Mike Riddell and their Strategic Bond fund is certainly beginning to gain some traction helped by some attractive pricing which is forcing it onto peoples radar.”
McDermott added it was “pleasing to see a group like Rathbones” in the top 10. “They have a sustainable franchise, which they’re getting behind and have sort of a well-known income product, and some fixed income and multi asset. The fact they were able to get £269m from net sales is very impressive indeed.”
However, the third quarter is likely to present fund managers with more challenges according to Pridham report editor Helen Pridham. She said: “Managers now have to demonstrate not only good performance but also that they have strong investment processes and risk controls in place to avoid a repetition of the Woodford scandal.”
Baillie Gifford continues to drop
Baillie Gifford came out on top as the bestselling fund group in the UK in 2018 with net sales of £3.1bn, but fell to third place in Q1 2019 with £669m.
In Q2, it fell again to seventh place with £560m.
McDermott added: “Baillie Gifford have been very, very popular for a long period of time, due to excellent long term performance. I don’t have an observation as to why they slightly dipped down other than potentially people have obviously got a lot of allocation to Baillie Gifford and they have a very specific growth style, which has done very, very well. However, maybe people don’t want any more it and are looking to diversify.”
In Q1, Quilter Investors and T Rowe Price came ninth and tenth in the top ten, however, this quarter, both were knocked off the list.
