M&G fund suffers biggest outflows

Figures from the research provider show the strategic bond fund, which is managed by Richard Woolnough, had haemorrhaged £3.3bn in 2016.

A spokesman from M&G declined to comment on the figures.

This comes after data indicated the M&G fund had been the biggest victim of all UK funds in June, the month of the Brexit vote.

Peter Lowman, chief investment officer at the Investment Quorum, said: “M&G’s Optimal Income fund has been very well supported over the years, but we are entering a new paradigm given the change of thinking towards the fixed interest markets and central bank policies. 

“This has led to the fund experiencing huge redemptions throughout last year which has probably acted as a severe headwind for the managers.” 

However, Mr Lowman held out that it is “still an excellent fund”.

Standard Life Investment’s £887m European Equity Income fund suffered the second largest outflows, after £1.6bn poured out of the fund during the year, Morningstar data shows.

However, a large part of these outflows were due to an internal transfer after Standard Life decided to reclassify the way its Global Absolute Return Strategy (Gars) fund invests in other mandates, including the European Equity Income fund.

That outflows was an internal shift, the Gars fund used to invest in the European fund, but they've been moving all the Gars investments into single mandates rather than funds, so most of that outflow was them just moving money internally

Part of these outflows were due to an internal shift, the Gars fund used to invest in the European fund, but they've been moving all the Gars investments into single mandates rather than funds, so most of that outflow was them just moving money internally

Three other M&G vehicles featured on the 10 worst-sold fund list of the year, after investors pulled £1.3bn from its £6.4bn Global Dividend fund, putting the vehicle in third place for largest outflows.

The M&G Recovery and the M&G Strategic Corporate Bond fund sat in sixth and seventh place respectively in terms of outflows last year.

However, on the other side of the spectrum, Morningstar data indicated the £8.7bn Fundsmith Equity offering proved the most popular investment vehicle in 2016, after investors poured £2.8bn into Terry Smith’s fund.

Last month, managing director at Tilney Bestinvest Jason Hollands said Fundsmith’s popularity was largely due to the manager’s no nonsense approach to investing.

In fact, Mr Smith ploughed an extra £115m of his own spare cash into the fund last year, taking his personal interest in the fund to over £200m.

Mr Lowman said: “Terry Smith’s ability to pick quality companies that have tremendous balance sheet strengths, which in turn delivers superior investment performance, is second to none. 

“Clearly, his ridged investment strategy has delivered a stellar performance, not just last year, but since the funds inception." 

He added: “It is not surprising that this fund has been one of the bestsellers last year, or indeed, since its inception.”

Meanwhile, Invesco Perpetual’s £7.4bn Global Targeted Returns was just pipped to the top spot after seeing £2.7bn piled into the fund last year, while Aviva Investors’ £3bn Multi-Strategy Targeted Return fund came third with net inflows of £1.9bn