Record sales of tracker funds were registered in March in spite of overall fund retail sales continued to decline, according to recent Investment Association data.
Tracker funds saw net retail sales of £938m, the highest ever. The last high was in October last year when £590m of the funds were sold. Since then sales had been declining. In January and February this year, only £348m and £358m of tracker funds were sold.
This boost to passive sales comes as a general decline in retail sales continues. In March of this year, only £1.1bn of funds were sold, compared to £2.5bn in the same month last year. However, funds under management saw a modest increase from £786m in March last year to £880m this year.
Investors have been dumping UK equity funds for European equity funds. UK equity funds saw their largest ever outflow of £963m, as investors continue to pull money from the region. In January of this year there was £515m of outflows, while in February there was £530m.
This money is finding its way into European equity funds, which were the best selling in March, the first time since October 2013. Investors poured £663m into the funds, up considerably from earlier this year. In January investors bought £95m of the funds, jumping to £370m in February.
Daniel Godfrey, the chief executive of the IA, said: “Net retail sales this March were well down in comparison to a year ago following the pattern seen in January and February.”
Meanwhile, the end of the tax year saw a smaller last minute rush into ISAs. There was £585m invested between March 1 and April 5, this compares to £822m in the same period last year.
However, there was an overall growth in annual sales for the latest tax year, with £2.6bn invested in the 2014-2015 tax year, compared to £2.2bn in the previous tax year. This was “helped by the increase of the tax free ISA allowance,” according to Mr Godfrey.
