Looking at specific sectors, equity funds saw their first net inflows for the first time since August last year while looking at specific assets shows fixed income with the biggest sales.
A ‘risk-on, caution-on’ mindset is the investors’ favourite right now, with net retail sales in fixed income of £671m in the month of January, its highest level since 2010. Fixed income also represented three of the top four sectors in terms of sales, with corporate bonds (£303m), strategic bonds (£129m) and global bonds (£118m) sandwiching absolute return, the third most popular sector (£128m).
From the outside looking it, it would appear retail investors want their money to work for them but they are still not ready to let loose and feed the equity beast. They have clearly chosen to continue down the fixed income route but even here they are allocating millions of pounds to strategic bonds – they want someone else to make the next asset allocation decision for them.
It is the same for those who venture outside the fixed income space as the second-highest selling asset class was mixed asset (£135m).
Overall, the indication is clear – 2012 has started with investors desperate for some good news (Europe hasn’t gone bang; Greece hasn’t gone bust – good news!). They are desperate to put their money to work and think they have made the decision to do so but ultimately are leaving the tougher choices for managers – I suppose it’s what we pay them for.
ISA-holders are voting with their wallet and for the fourth straight month they have seen net outflows. What is particularly interesting is that within ISAs, in January UK All Companies saw a net retail outflow of £110m, the highest since July last year.
To me this shows investors’ nervousness about (a) equity investing and (b) UK investing.
Therefore, multi-asset investing, including strategic bonds within fixed income, is my bet to top first quarter net sales rankings, and maybe even the first half of 2012.
