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Equity funds hit again in 'subdued' January sales

Equity funds hit again in 'subdued' January sales

Negative investor sentiment on equities returned to the fore in January in what was a quiet month for fund sales overall.

Any hopes that bumper sales in November and December would carry on into 2017 were dispelled by Investment Association (IA) figures, which showed UK investor activity remained relatively subdued.

Total net retail sales reached just £366m, down from £2.7bn in December and £1.5bn in November. Meanwhile January saw investors shunning equity offerings, with the asset class suffering net retail outflows of almost £700m.

The previous two months provided combined equity sales of £1.2bn but UK and European equities saw £408m and £340m of net redemptions respectively in January. Global and US-focused fund sales helped alleviate matters somewhat.

Alistair Wainwright, fund market specialist at the IA, said: "The momentum of inflows into equity funds toward the end of 2016 did not carry through to the New Year. UK and European equity funds were once again worst hit.

"Global and North American focused funds were the only positive equity regions in January as investors sought to take advantage of the 'Trump trade' and the new administration's expected relaxation of regulation in the US."

Targeted Absolute Return funds took their usual place as top-selling IA sector with £297m.

Mixed asset was the best selling asset class with £428m. Fixed income came in second place, with overall net sales of £231m.

However, in fixed income this was less than half the amount seen in December, and entirely down to Strategic Bond funds - the second-best selling sector overall with £229m of net inflows.

Tracker funds achieved net sales of £320m.

Despite the subdued activity, there were some signals investors had resumed putting cash to work. Money market funds saw a net outflow of £70m, only the second case of redemptions in the past 12 months, where total net sales are still £2.3bn.

Chris Cummings, chief executive of the IA, added: "2016 finished with a flourish as December recorded the highest net retail sales for the year, so it is not surprising to see sales were somewhat subdued in January."

Best selling Investment Association sectors in January 2017:

Investment Association SectorRankingNet retail sales RankingNet retail sales Asset Class
  in Jan 2017in Jan 2017  in Dec 2016in Dec 2016  
Targeted Absolute Return1£297 million1£422 millionOther 
£ Strategic Bond 2£229 million3£264 millionFixed Income
Mixed Investment 40-85% Shares   3£175 million4£217 millionMixed Asset
Specialist  4£104 million6£151 millionEquity  
Flexible Investment5£81 million12£68 millionMixed Asset