Wealth and discretionary managers drive equity fund sales

The flood of money into retail equity funds is being driven by wealth and discretionary managers according to the latest Pridham Report.

The report said net sales of equity funds this year were on course to reach their highest level since 2000 adding that according to IMA figures the level of net sales surpassed £8bn in the first nine months of the year.

“The stock market rally and poor rates of interest on cash have encouraged investors to turn to equity funds for higher yields and the prospect of real returns,” the report said.

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“However, the main drivers of these purchases appear to be wealth managers and discretionary fund managers who now control many investment portfolios, rather than mass market investors who have fallen into the advice gap.”

Helen Pridham, editor of the Pridham Report, said companies with top performing equity funds had benefited the most.

“Many managers are enjoying a new lease of life thanks to increased sales of equity funds and as some of the larger equity funds reach capacity other providers are gaining,” she said.

The report said M&G Investments attracted the highest gross retail sales in the third quarter while Standard Life Investments remained at the top for net sales for the fourth consecutive quarter.

Schroders rose to second position for gross and net retail sales. The report said its figures now include sales of Cazenove funds, notably Cazenove UK Opportunities which was the group’s best- selling fund, accounting for roughly 20 per cent of gross sales.

The report said Artemis “jumped” to third position for net sales while Henderson saw a “strong turnaround in its fortunes” after rising to fourth in net sales “now that its business levels have finally settled down after its acquisitions of New Star and Gartmore”.

“Its European equity funds are in particular demand and it has also seen increasing flows into its UK Property fund as investors seek to diversify their sources of income,” the report added.

Elsewhere, Baring Asset Management made its “first appearance” in the net retail top 10 “for some time” thanks to investors’ increasing appetite for European funds and the growing success of its mixed asset fund.