Fund launches dwindle to decade low in 2011

Fund launches reached a decade low last year as groups held back new products in the face of market volatility.

In total there were 132 onshore, UK-registered fund launches last year, meaning fewer new products entered the market than during the credit crunch, according to data from Lipper.

Of the groups that did roll out funds, several went back to basics with products designed to generate consistent returns with lower risk profiles.

Managed funds topped the charts last year with 17 new additions to the sector, according to Morningstar.

Close Asset Management, Fidelity, and Vanguard launched a number of managed offerings, while low cost active funds began to gain traction.

The absolute return sector’s popularity continued to grow, with eight new additions from groups including BlackRock and Ignis.

With the extreme market swings investors have endured over the past year, it is perhaps unsurprising the sector is in vogue, given its aim to achieve a total return in any market conditions.

The St James’s Place UK Absolute Return fund, launched at the end of January last year, has already raised £370m, reflecting strong investment appetite for the sector.

Global funds were also popular, with eight funds launched into this area as groups looked to benefit from their broad investment remit.

In stark contrast, there was little demand for funds investing in riskier assets, with the China and Asia excluding Japan sectors gaining just one fund each.

Simon Ellis, managing director at Legal & General Investments, said groups have been putting new product launches on ice as they focus their attention on regulatory issues.

“The fund management companies are preoccupied with dancing around regulatory agendas as opposed to raising new funds,” he said.

“With RDR just twelve months away, groups are focusing on share classes and a lot of resources are tied up in MiFID II, UCITS IV and ESMA rules.

He added with so much uncertainty in global markets, there has been little commonality in the products that have launched.

“Last year there were no obvious new trends for funds to launch into with markets being so volatile, but this will not be permanent when markets recover. This year, with the IMA creating a new sector, I expect a number of groups to roll out global income products.”