Spooked investors return to retail funds with £4bn April inflows - IA stats
Record outflows in March
UK investors put £4bn into retail funds in April this year after record outflows in March prompted by the coronavirus lockdown, latest figures from the Investment Association (IA) show.
Active funds saw new retail sales of £2.7bn in April, nearly double that of tracker funds which netted £1.4bn in net retail inflows, the IA said.
Equity funds returned £2.4bn in net retail sales and some £1.1bn flowed into ISA funds as the new tax year started. Responsible investment funds also proved popular with record net retail sales of £969m in April.
IA chief executive Chris Cummings said: "After record outflows from the fund market as global lockdown measures began in March, savers returned to put £4bn into retail funds in April.
"Part of this comeback was fuelled by record inflows into responsible investment funds in April. The crisis has brought a new momentum to the subject of responsible investing, with asset owners and retail investors asking more about their investment manager's environmental, social and governance approaches.
"Both active and passive funds benefited from the return to inflows in April. Bond funds gathered £903m in assets, suggesting some of March's record redemptions flowed back quickly as we moved past the initial market turbulence of the Covid-19 pandemic."
AJ Bell personal finance analyst Laura Suter said it was time for active managers to "shine".
"Investors are backing active fund managers to help navigate the volatile markets at the moment, with the bulk of the inflows going to active managers and a much smaller proportion going into tracker funds.
"In theory now should be the time for active managers to shine, as they target the companies that are unfairly discounted or primed to rebound and avoid those that are going to be casualties of the current crisis."
She added sustainability would be a key theme during the coronavirus recovery: "While the environmental aspect of ESG funds was always the draw for many investors it's likely that we'll see the ‘sustainable' branch of responsible investing becoming more prominent as we recover from this crisis.
"There's a lot of focus on how companies are reacting to the coronavirus crisis in terms of how they are treating their staff, whether they are using the government support schemes and how they're supporting wider society. Investors are likely to pay close attention to these aspects as the companies that responded well are likely to have gained a lot of goodwill that will stand them in good stead as we move into the recovery phase of the pandemic."
Chart-topper
The IA's Global sector topped the best-seller list with £1.2bn in sales. Second place went to UK All Companies with £874m and third was the Sterling Corporate Bond sector with £535m.
The worst-selling IA sector in April 2020 was Targeted Absolute Return with an outflow of £491m.
Overall assets under management stood at £1.2trn in April 2020, the same figure as of April 2019.
Tracker funds saw a net retail inflow of £1.4bn during the month. The IA said tracker funds under management stood at £215bn with their overall share of industry funds under management standing at 18%.
In April, gross retail sales for UK fund platforms totalled £12.3bn - representing a market share of 49%.
Gross retail sales through Other UK Intermediaries including IFAs were £6.6bn, representing a market share of 26%. Direct gross retail sales in April were £2bn, representing a market share of 8%.
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