Investments  

Fund sales fall to lowest level in a Q1 in seven years

Fund sales fall to lowest level in a Q1 in seven years

Retail fund sales fell to their lowest level in a first quarter since 2008 due to uncertainty surrounding the election, according to the latest Pridham Report.

Put together by Helen Pridham, the report monitors fund managers’ quarterly flows.

The latest edition showed that despite the increased Isa allowance, there appears to be little appetite for purchasing funds through them.

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Ms Pridham said: “Fund sales were muted in the first quarter of this year partly due to the competing attractions of the NS&I’s new Pensioners Bonds but also to mounting uncertainty among UK investors about the outcome of the general election.

“Given the average age of investors in January and February we were seeing a lot of them putting money into the Pensioner Bonds, which had rates above average.

“The markets went through the 7,000 barrier and, typically, when share prices go up people pile into equities, but nowadays a lot of money is managed in a discretionary way.”

Up to £10bn of Pensioner Bonds were made available in January, paying an annual interest rate of up to 4 per cent for the over-65s.

By March £10bn of the bonds had been sold to 825,000 people.

Fund managers that did well were those that saw strong sales for their bond products, such as Kames.

Ms Pridham said: “Although net business flows into fixed-income funds are generally modest, there appears to be a considerable amount of switching going on as investors seek out the best returns they can find in this asset class.”

BlackRock led the pack in both gross and net sales and Ms Pridham said it was benefitting from increasing sales of its passive funds, which accounted for the majority of its new business.

Bristol-based Hargreaves Lansdown attracted particularly strong sales in Q1 thanks to the launch of two new multi-manager funds – HL Multi-Manager UK Growth and HL Multi-Manager European.

Together, these funds raised more than £250m in their offer periods.

Meanwhile, Fidelity entered the top 10 among fund managers by net retail sales.

Ms Pridham said: “Mature fund management companies often have to run considerably harder than their younger competitors to grow their net business.

“Fidelity’s improved investment performance has been a key to its success.”

Adviser view

Dennis Hall, chief executive of London-based Yellow Tail Financial Planning, said: “We have not noticed a trend of retail fund sales falling. The flows we are seeing are not abnormal for what we would expect at this time of year.”

Top 10 managers by gross retail sales in Q1 2015 (£m)
1BlackRock£3,305
2Standard Life Inv£2,138.8
3M&G£2,013.5
4Invesco Perpetual£1,918.7
5Fidelity£1,915.5
6Henderson£1,526.8
7Legal & General£1,468.9
8Schroders£1,373.7
9Old Mutual Global Investors£1,328
10Jupiter£1,234.2

Top 10 managers by net retail sales in Q1 2015 (£m)
1BlackRock£1,058
2Woodford Inv£800 (estimate)
3Standard Life Inv£658.6
4Kames£390.1
5Hargreaves Lansdown£366
6Henderson£321.4
7Old Mutual Global Investors£317
8Premier Asset Management£269.8
9Royal London£256.6
10Fidelity£250.8