Sharp drop in funds retail sales in July – IMA
Retail sales of funds were sharply down in July with equity funds experiencing strong outflows from the UK, European and north American sectors, according to the latest monthly data from the UK’s Investment Management Association (IMA).
Net retail sales were £936m in July, well below the monthly average of £2.3bn for the previous 12 months and the lowest level since October 2008, IMA said. ISA sales hit their lowest level since February 2009 with a net outflow of £29m, compared to a positive monthly average of £186m for the previous 12 months (See table below).
Balanced funds were the leading asset class with net retail sales of £383m in July, below the monthly average of £556m for the previous 12 months.
Net retail sales of bond funds were £361m, well below the monthly average of £539m for the previous 12 months.
Equity funds saw a net outflow for the first time since February 2009 with net retail sales of £-114m in July, compared to an average monthly net inflow of £676m over the previous 12 months. Net outflows from UK, European and North American funds outweighed net inflows into global, Japanese and Asia-Pacific funds.
Looking at sectors, cautious managed funds were the best selling IMA sector with net retail sales of £216m in July. This is the fourth month this year that cautious managed funds have been the highest selling sector, IMA said. Year to date net retail sales of cautious managed funds totalled £2.2bn, only slightly below the £2.4bn total for 2010.
For the second month running, UK sterling strategic bonds were the second most popular IMA sector with £156m in net retail sales. Balanced managed funds were the third most popular IMA sector with net retail sales of £146m.
While net retail sales fell to levels last seen three years ago, sales of bond funds and balanced funds held up moderately well and sales of sterling corporate bonds were also positive.
Sterling corporate bond funds were the fifth highest selling sector with reported net retail sales of £85m, above the monthly average for the previous 12 months of £15m and the highest level since October 2010. Following a recent spate of outflows, this is the first time in nine months that the sterling corporate bond sector has been in the top five selling sectors.
However, it is still too early to draw long-term conclusions about the recent figures said Richard Saunders, IMA chief executive. “At this stage it is too soon to speculate on whether these figures, which predate August’s market volatility, presage a shift in investor behaviour or are simply a one-off.”
Gross retail sales for “other Intermediaries” which include wealth managers and stockbrokers were £3.8bn in July, below the monthly average of £4.6bn for the previous 12 months. Other Intermediaries continued to take the largest market share in July with 45% of total sales.
Gross retail sales through fund platforms were £3.7bn, broadly in line with the monthly average of £3.8bn for the previous 12 months. The market share for platforms was 41% of the total in the first seven months of this year compared with 37% for the same period in 2010. Direct channels’ gross retail sales were £970m in July, accounting for 12% of total sales.