Some 59% of fund groups operating in the UK grew net sales in Q2 in a sign of improving investor confidence, according to the latest Pridham report by ISS Market Intelligence.
It marks the third straight quarter where over half of the UK’s asset managers have grown net sales figures.
Meanwhile, 43% registered positive net flows during the quarter, up from 38% in Q1 — the largest proportion recorded since Q3 2021.
BlackRock led both gross sales (£9.3bn) and net sales (£2.7bn) as passive funds drove most of the positive flow activity overall.
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Vanguard’s debut entry into the Pridham Report saw the firm rank second in both gross and net sales across the second quarter.
The US asset manager recorded £7.2bn in gross sales and a net £1.6bn fund sales in the UK between April and the end of June. The success of its LifeStrategy range saw the firm lead the way in multi-asset fund sales.
Overall, JP Morgan Asset Management was the largest mover in the rankings, rising to sixth place for net sales.
The firm’s performance was improved by the launch of a UK-domiciled version of its Global Focus fund in Q2, which was the best-selling fund by net sales for the quarter.
Since launching earlier this year, the strategy has passed £1bn in size.
Benjamin Reed-Hurwitz, EMEA research leader at ISS MI and lead author of the Pridham Report, said: “There is a sense of guarded optimism among fund groups at the end of the second quarter. Inflows were steady and there has been a slowdown in outflows among the UK’s largest fund groups, suggesting that investor confidence is improving.
“Whether that trend continues in Q3 remains to be seen, especially considering the severe market volatility we have witnessed in recent weeks. However, in the past investors have been drawn to equities when interest rates are falling, as they have begun to in Europe and, perhaps, soon in the US, too. That may well provide the conditions needed to carry that momentum through to the end of the year.”
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By sector, Global and North America continued to prove the most popular for equity funds among retail investors.
In terms of fixed income, investors favoured Sterling corporate bond funds, which was the best-selling fund sector for eight out of the top 10 best-selling bond fund houses by gross sales.
Reed-Hurwitz added: “While the success of passive funds has put a recent dent in many active managers fortunes, there is a sense that investment opportunities will continue to broaden in the coming quarters, particularly in equity, which will provide an opportunity for many active styles to thrive.
“Changes in demand for active and passive solutions, however, are not only a function of evolving market conditions. It is also a function of today’s cost-conscious environment and the rise of investment gatekeepers in the retail arena. The move to centralised investment propositions and consolidation amongst advice firms has led to investment gatekeepers influencing more and more of where the money is being invested. Consequently, their portfolio construction preferences have become more visible in the fund landscape.
“Adapting to this environment is leading to more partnerships being formed at the entity level between fund managers, gatekeepers and/or distributors, and a refining of market segmentations to better identify the true decision-maker behind today’s investment decisions.”
