UK tracker funds show highest sales on record in Q1

Index-tracking funds, or tracker funds, showed their highest ever sales over a quarter in the first quarter of 2011, indicating a move away from active fund management by UK investors, while funds of funds grew more popular, particularly those invested externally.

Tracker funds, which replicate the performance of a stock market index and do not rely on active fund management, recorded their highest sales in a quarter since UK trade body the Investment Management Association (IMA) began compiling records in 1992.

In Q1 2011, net retail sales of tracker funds totalled £824mn, following a steady increase in sales since the first quarter of 2010 after a dip in the last two quarters of 2009.

Tracker funds under management meanwhile rose by 19% in the first quarter of 2011 compared with the first quarter last year.

Of total funds under management, the proportion made up by tracker funds was still relatively small at less than 7%, though that was the highest proportion of funds that trackers have ever comprised.

In the UK, of the 81 tracker funds registered with the IMA, 40, or 49%, track the main UK indices, mainly the FTSE 100. The remainder tracks a spread of other equity indices, including European, Global, Asia Pacific and the US.

UK investors also continued to put money into funds of funds in the first quarter, as 12% of gross retail sales, or £1 in every £8 invested, went into that type of fund. Net sales of unit trusts and OEICs have risen sharply since 2009, increasing to £9,726mn in 2010 from £4,927 in that year.

ABOUT THE AUTHOR
Luisa Porritt
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