Investors pile back into funds as Q2 flows exceed 2019's full-year total - IA stats
'Bargain hunters' return to the market
UK savers poured more cash into investment funds during Q2 than they did through the whole of 2019, figures from the Investment Association (IA) show.
The IA said a cumulative £11.2bn flowed into retail funds during the second quarter of 2020, as investors looked to take advantage of plunging equity market prices. The number marks a sharp rebound following the highest ever monthly outflow in March and eclipsed 2019's full-year total of £9.8bn.
IA CEO Chris Cummings said: "With coronavirus infection rates now rising globally post-lockdown and US real GDP having contracted 32.9% in Q2, the outlook for fund flows for the second half of 2020 remains uncertain."
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Laura Suter, personal finance analyst at AJ Bell, said the figures suggested investors had been "on the hunt for bargains following market falls earlier this year".
June marked a third successive month of inflows, with the IA's Global sector was biggest beneficiary, as savers bet equity markets would continue to recover from their Covid-19 sell-off, taking in a net £930m.
In H1 overall, global equity funds saw net inflows of £2.8bn, despite £700m of outflows in March.
This showed investors had "hedged their bets", according to Suter, "rather than pegging their hopes on one country getting out of the current pandemic in better shape than others".
Bond funds also saw strong investor sentiment, with the Global Bond and Sterling Corporate Bond sectors seeing £868m and £732m of inflows respectively.
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However, UK equity funds fared less well, with the UK All Companies sector the worst-selling in Q2 with £662m of net outflows. In total, £1.1bn flowed out of UK equity funds in June.
Elsewhere, both tracker and responsible investment funds continued to see net inflows, of £2.1bn and £669m respectively.
For trackers, the figures represent a return to favour, with investors having shunned them earlier in the year, favouring active management instead.
The bounce back in interest for passives "is likely because active managers have failed to outperform on average in many sectors during 2020's volatility and market recovery, leaving investors disappointed and switching back to cheaper rivals", Suter suggested.
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