M&G’s Optimal Income fund suffered the worst outflows in June, as investors flocked to safe ground by ploughing money into Legal & General’s Cash trust, figures from FE have revealed.
The £14.8bn M&G Optimal Income fund fared the worst, after £509m was pulled from the fund last month.
When FTAdviser approached M&G for a response, a spokesman declined to comment.
The popular £8.6bn Woodford Equity Income fund also featured on the outflow list, coming in 12th after seeing £141m exit the vehicle in the space of a month.
| Fund Name | Size 1m ago (£m) | Size Now (£m) | Performance Effect on Size (£m) | Outflows (£m) |
| 1. M&G Optimal Income | 14,554.17 | 14,785.39 | 740.5 | -509.28 |
| 2. Artemis Income | 6,564.15 | 6,098.67 | -98.35 | -367.13 |
| 3. Threadneedle UK Equity Income | 3,291.69 | 3,233.68 | 135.03 | -193.04 |
| 4. Aviva Inv Property Trust | 1,842.4 | 1,616.9 | -34.92 | 190.58 |
| 5. Threadneedle European Select | 3,245.56 | 3,232.21 | 164.88 | -178.22 |
Meanwhile, on the other side of the spectrum, FE figures revealed that L&G’s £559m Cash trust topped the list in terms of inflows. Investors injected £477m into the vehicle, causing it to increase by seven times its size.
This comes after figures revealed cash had become the go-to vehicle for investors before Brexit, as BlackRock, Aberdeen and Fidelity’s cash funds topped the list as the most researched funds.
The £7.1bn Fundsmith Equity fund also saw strong inflows, pulling in £372m of extra investment during the month.
Mika-John Southworth, director at FE, said the fact the L&G trust has attracted nearly half a billion pounds in the space of a month goes “a long way” to highlight the cautious mood which had gripped investors.
He pointed out the top 25 winners all have exposure to perceived lower-risk assets.
| Fund Name | Size 1m ago (£m) | Size Now (£m) | Performance Effect on Size (£m) | Inflows (£m) |
| 1. L&G Cash Trust | 81.57 | 558.62 | 0.02 | 477.02 |
| 2. Fundsmith Equity | 6,153.84 | 7,059.27 | 533 | 372.43 |
| 3. Invesco Perpetual Global Targeted Returns | 5,870.50 | 6,071.04 | -124.59 | 325.13 |
| 4. Royal London FTSE 350 Tracker | 4,408.77 | 4,744.86 | 25.32 | 310.77 |
| 5. Royal London Cash Plus | 1,450.18 | 1,724.43 | 0.84 | 273.41 |
However, the Fundsmith Equity fund bucks the low-risk trend, Mr Southworth said.
“The fund has managed to significantly and consistently outperform both its sector and its benchmark,” he said, adding the portfolio returned more than 6 per cent on the day after the EU referendum, when many funds were struggling with news of a Brexit vote.
Ben Willis, head of research at Whitechurch Financial Consultants, said: “I am not overly surprised by investors’ sentiment pre-Brexit.
“If a significant number of investors were upping their cash weighting then you could see why M&G Optimal Income has suffered proportionately due to its popularity. Ben Willis“I spoke to a number of advisers whose clients were getting nervous about the vote and wanted to move into cash, so I’m not surprised by M&G Optimal Income suffering outflows per se, as this is a ubiquitous fund which is why it is just under £15bn in size.
“If a significant number of investors were upping their cash weighting then you could see why it has suffered proportionately due to its popularity.
As for the Fundsmith Equity fund, Mr Willis said he could see why this would be attractive to nervous investors before and after the Brexit vote.
“The fund invests in global leading franchises, only holding quality, defensive businesses that display visible growth.
“These stocks have done well in recent years and are trading on high multiples, but investors are happy to pay-up for the visible earnings growth these companies offer during periods of uncertainty.”
This article has been amended after incorrect data was provided.
katherine.denham@ft.com
