Fundsmith topped the Pridham Report’s net sales rankings in the second quarter, seeing its inflows almost double in a period which ranked as the worst on record for fund groups.
The equity boutique was joined by Legal & General Investment Management (LGIM) and Hargeaves Lansdown in securing stronger net sales despite the overall industry suffering record outflows.
UK investors pulled £3.5bn from onshore and offshore funds in June alone, according to the Investment Association, capping a disastrous second quarter for many firms.
The Pridham Report – which tracks asset managers’ gross and net retail sales on a quarterly basis – described the three months to June 30 as “bleak”. As with the first three months of 2016, the industry suffered net outflows, marking the first time in 30 years it suffered two consecutive quarters of redemptions.
But Terry Smith’s Fundsmith bucked the trend, recording £1bn in net sales over the period, up from £600m in the first quarter. LGIM, Hargeaves Lansdown, Fidelity and Premier rounded out the top five.
Woodford Investment Management dropped from second to ninth as net sales fell from £550m to £130m. Rathbones and Marlborough entered the top ten after strong backing for certain strategies.
The report added that LGIM’s net sales were strong due to the popularity of its tracker funds – in particular the L&G Global Inflation Linked Bond Index vehicle – among wealth managers. This compensated for redemptions from its property fund.
| Pridham Report | |
| Asset Manager | Net Retail Sales in Q2 2016 |
| Fundsmith | £1bn |
| LGIM | £400m |
| Hargeaves Lansdown | £302m |
| Fidelity | $291m |
| Premier Asset Management | £264m |
In terms of gross sales, BlackRock continued to top the table with £2.5bn in the three months, slightly up on its first quarter figure.
Fidelity, Standard Life Investments, Invesco Perpetual and LGIM made up the top five, with the latter replacing Henderson from the Q1 list.
Boutique Fundsmith made it into tenth, its first appearance in the gross top ten, with £1.3bn of gross sales, suggesting a significantly stronger asset retention rate than its larger peers.
The report highlighted gross retail sales did not suffer a downturn and said high-frequency switching between funds by investors was a strong theme.
“[Stable gross sales] shows continued demand for funds but, when coupled with high redemptions, also indicates a significant amount of switching,” report editor Helen Pridham, said.
“JPMorgan saw increased demand for its US Equity Income and Global Macro Opportunities funds. However, as one of the industry’s most mature groups, it naturally suffers outflows.”
Last quarter, the Pridham report warned mature fund groups were at risk of significant outflows due to this investor behaviour.
Ms Pridham added: “The second half of this year is likely to remain challenging for fund managers.
“Many managers were expecting a remain vote would lead to a more ‘risk on’ attitude in the second half but the leave vote has left advisers and investors feeling uncertain and cautious.”
