April saw the largest net influx of cash into the Investment Association (IA) fund universe since August 2021, according to the organisation’s latest fund flow figures.
Net retail sales hit £2.8bn in the month as investors looked to use up their £20,000 ISA allowance before the yearly tax deadline. This was up from £504m in March.
By asset class, investors placed a net £1.1bn into fixed income, while equity funds saw £941m in inflows.
IA Global was once again the best-selling sector, with net inflows of £1.3bn, the sector’s highest since April 2021. Volatility Managed was also popular, recording £491m net retail sales.
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Tracker funds, meanwhile, hit a new record high of £3.8bn net inflows, exceeding November 2020’s £3bn.
“Active funds remain under the passive cosh too, and fund managers will be wondering how much longer they have to endure this freefall before they hit rock bottom,” Laith Khalaf, head of investment analysis at AJ Bell, said.
“The ongoing shift towards passive investing has been partly driven by the melt-up of the biggest stocks in the US market producing strong performance from index trackers. Investors are now more benchmark aware, cost conscious, and many just want a simple option to plonk in their pension. Passive funds very much fit the bill.”
While investors favoured equity trackers – £2.6bn in April – all asset classes saw inflows to tracker funds across the month, including fixed income and mixed assets at £842m and £287m respectively.
Multi-asset funds witnessed their first month for positive inflows since March 2022, totalling £376m. Inflows were concentrated to Mixed Investment 40-85% shares which has historically been the most popular selection within the Mixed Asset sector among investors.
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North American equity inflows declined from £662m in March to £278m. However, UK funds saw net outflows of £1.3bn.
Meanwhile, Responsible Investment outflows remained neutral at £12m.
Miranda Seath, director, market insight & fund sectors at the Investment Association, said: “The positive inflows for April signal the green shoots of investors’ increasing confidence. The sharp rise in inflows can partly be attributed to the new tax year, with strong ISA sales during April as investors sought to maximise their personal allowances.
“As we head to the polls in the UK on 4 July, it remains to be seen how the UK election will impact investor attitudes, particularly the extent to which it will influence investor demand for UK equities, which have remained in outflow through Q1,” she added.
“The next elected government will have limited fiscal headroom and will be required to balance competing spending priorities, but despite these constraints, there will be an opportunity to restore stability to the UK economy as UK inflation continues to calm and we see tentative growth.”
