Retail fund sales in the UK dropped to a 20-year low last year despite a relatively positive year for markets of all stripes.
The quarterly Pridham Report said net sales of funds in 2016 were the lowest seen since 1995, as major political events such as the UK’s EU referendum and US presidential election contributed to investor nervousness.
Pridham’s figures showed fund manager Terry Smith’s Fundsmith enjoyed the highest net sales during the year in spite of offering just one open-ended fund. The firm’s Fundsmith Equity product took in a net £2.9bn last year, well in advance of second-placed Fidelity’s £1.6bn in sales.
Although equity markets proved able to climb higher after both events, risk appetite seemingly never recovered from the hit to sentiment that was sustained when markets slumped in the opening weeks of the year.
Separate figures from the Investment Association (IA), in Chart 1, also released in February, showed that net retail sales for the industry as a whole stood at £4.7bn in 2016 – a fall of more than 70 per cent on 2015’s £16.8bn and below even 2008’s figure of £4.8bn.
The most significant slumps were in January, when falling markets prompted a net outflow of more than £1bn, and June, which saw a record £3bn in redemptions around the time of the Brexit vote.
Equity funds as a whole ended the year with outflows of £8.2bn. But in a sign of the relative resilience of passives, tracker funds took in £4.9bn during the year; down by a relatively respectable 28 per cent on 2015 levels.
“Despite global stock markets performing well over the year, retail investors sold out of equity funds. Property funds also suffered as advisers and wealth managers moved away from the sector,” said Alastair Wainwright, fund market specialist at the IA. Property funds saw net outflows of £2bn last year.
dan.jones@ft.com
