Investments  

Was 2017 really a banner year for fund flows?

Another significant sufferer is Woodford Equity Income. Neil Woodford’s returns have suffered this year from a number of stock-specific issues, pushing him to the very bottom of the UK Equity Income sector over one and three years. Invesco Perpetual’s Mark Barnett, whose portfolio is similar to Mr Woodford’s, has also seen an increase in outflows as a result.

At the other end of the scale, just one equity fund features in the year’s list of successes: Terry Smith’s Fundsmith Equity has continued to find favour after another year of strong returns. Aside from that, the list contains four multi-asset funds, three trackers, and two active bond funds. As well as Optimal Income, M&G’s Floating Rate High Yield portfolio has attracted attention for its purported ability to combine a lofty yield with a more defensive approach to the asset class.  

In Table 5, as elsewhere in the survey, funds that have seen significant inflows as a result of corporate restructurings have been excluded. These figures can have a distorting effect: in BlackRock’s case, Morningstar’s headline figures show its overall inflow stands at £32bn for the year. But more than £24bn of this amount was due to some of the firm’s defined benefit funds being shifted into retail structures.

Multi-asset mix

The figures in Table 1 and Table 2 exclude fund of funds – figures for these portfolios can be found in Table 3 and Table 4. Jupiter does worst as a result of continued outflows from the Merlin multi-manager range. 

Another multi-manager range of old – that run by Schroders – was also among the most significant strugglers in 2017. Wealth manager 7IM also features in Table 4, but its offshore fund range – not accounted for by the Morningstar figures – has taken up much of the slack. 

Overall, what is striking is that few businesses saw material outflows from their multi-manager ranges, despite many investors now favouring more ‘modern’ multi-asset strategies offered by providers in Table 3.

Topping the pile here is Vanguard, whose LifeStrategy range has taken in £2.7bn in the first 10 months of 2017 alone. Its passive multi-asset funds have managed to outperform their average active peers over this period, and their charges, at just 0.25 per cent apiece, have clearly added to the attraction. 

The arrival of Vanguard’s own platform may increase flows further in future – owning distribution arms certainly appears to have helped Old Mutual and Standard Life.

Perhaps the most telling statistic of all, for fund managers and advisers alike, is one that is not explicitly stated in these tables. The rise of multi-asset is in no small part down to the need for fund solutions focused on retirement needs; for evidence of this, look to figures from the IA.