BlackRock was the best-selling fund house of 2019 as passive funds continued to dominate the fund sales charts, according to the latest Pridham report.
The report, published yesterday (February 3), showed the most popular fund houses for both gross and net retail sales of UK funds in the year to December 31 were two of the main passive fund providers — BlackRock and Legal & General IM.
BlackRock topped the charts with £4.9bn of net inflows, a hefty £1.5bn ahead of its biggest rivals Legal & General Investment Management and Royal London Asset Management, which received £3.4bn and £2.85bn respectively.
| Top ten managers by net retail sales in 2019 | ||
| Rank | Fund house | Sales (£m) |
| 1 | BlackRock | £4,986 |
| 2 | LGIM | £3,474 |
| 3 | Royal London | £2,846 |
| 4 | HSBC | £2,405 |
| 5 | Baillie Gifford | £2,369 |
| 6 | Liontrust | £2,111 |
| 7 | Fundsmith | £1,340 |
| 8 | Allianz GI | £1,306 |
| 9 | Rathbones | £944 |
| 10 | JPMorgan | £530 |
Helen Pridham, editor of the report, said: “BlackRock, LGIM and HSBC Global Asset Management were among the 2019 winners for net sales, primarily due to the surge in passive business.”
Passive funds — which attempt to mimic a benchmark or index by replicating its holdings and performance to produce returns for investors — have increased in popularity over the past few years, primarily due to their comparatively low cost.
Mifid II rules, which made it mandatory for advisers to break down costs for their clients periodically, exacerbated the trend as the difference in cost between active and passive funds was more noticeable at a time when pressure on adviser fees and client costs had been increasing.
Ms Pridham said this trend was especially clear when studying net inflows for Q4 of last year, where HSBC bagged third place after seeing its net sales increase last year by more than 90 per cent due to passive flows.
| Top ten managers by net retail sales in Q4 2019 | ||
| Rank | Fundhouse | Sales (£m) |
| 1 | BlackRock | £1,079 |
| 2 | LGIM | £987 |
| 3 | HSBC | £947 |
| 4 | Royal London | £741 |
| 5 | JPMorgan | £676 |
| 6 | Liontrust | £541 |
| 7 | Baillie Gifford | £513 |
| 8 | Allianz GI | £344 |
| 9 | Rathbones | £294 |
| 10 | Franklin Templeton | £247 |
But the data also showed some notable successes on the active management side.
Royal London continued to attract strong support for its actively managed fixed income funds in particular, according to the report, while Baillie Gifford — which champions active management — also maintained a strong position.
Fidelity appeared in the top three for gross retail sales for both the year and Q4, receiving £10.4bn gross new business in 2019, but the fund house struggled to make the top 10 for net retail sales for either time period.
Morningstar estimates showed both its Moneybuilder Income fund and Strategic Bond fund, previously popular with retail investors, saw net outflows of £422m and £370m respectively while £222m was pulled from its American Special Situations fund in the year.
Nick McDowell, head of UK wholesale sales at Fidelity International, said: “2019 was another strong year for Fidelity’s UK wholesale team. Our overall net and gross sales for were both positive across a broad range of sectors, demonstrating our breadth of product and strong performance, particularly in Asian equities, emerging markets and global equity income.”
Martin Bamford, director of client education at Informed Choice, said: “Fund providers face an uphill battle for net inflows over the coming years, with an ageing population increasingly drawing on their invested funds in retirement.
“Those providers who emerge as winners are likely to offer index trackers, ESG funds, and genuine actively managed funds, which deliver great value for money.
“Established fund providers need to come up with new ways to connect with the next generation of investors, who currently lack the discipline to stash their money away for the long-term.”
imogen.tew@ft.com
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