30th April 2015
Fund sales during the height of the so-called ISA season fell off a cliff during March as investors turned their back on stockmarkets.
According to data from trade body, the Investment Association last month net retail fund sales came to £1.1bn, marking a dramatic 56% drop on March 2014’s tally of £2.5bn.
In addition, the organisation’s numbers showed that net sales of investment ISAs collapsed to just £325m in the key January to 5 April tax year end period, representing a 57% slide on the £756m enjoyed during the same period last year.
Commenting on the fall, Jason Hollands, managing director at fund brokers Tilney Bestinvest said: “While some of this might be explained by resurgent interest on pensions, the bigger factor is likely to be mounting anxiety over market levels at a time when the news has been dominated by turmoil in the Middle East, a potential Greek exit from the Eurozone and the uncertainty over the UK elections on 7 May.”
Notably, UK equity funds saw their largest ever net retail outflow of £963m. But where investors have committed to ISAs, income generating sectors such as equity income and property funds have led the popularity tables. “That’s hardly a great surprise when interest rates and bond yields remain so low. With data this week showing a slowdown in UK growth, the pressure is off the Bank of England to raise rates any time soon. So for now, yield generating funds look set to continue to attract investor’s cash,” added Hollands.
However index funds, which slavish follow, a particular index such as the FTSE 100 enjoyed a marked uptick in sales during March, as investors ploughed in £938m, the highest ever for the portfolio type.
Europe (excluding UK) funds with net retail sales of £506m topped the popularity tables during March, for the very first time since August 2000. Property funds with sales of £294m came second, while Targeted Absolute Return were just behind with £293m in sales.