Equity  

Investors inject £295m into UK equity funds in July

Investors inject £295m into UK equity funds in July

Investors have ploughed £295m into UK equities July as dividends continued to strengthen and boosted investor confidence, according to the latest figures from the Investment Association (IA).

Net retail sales to equities were the highest of any asset class at £1.7bn for the second consecutive month, with the UK region rebounding after two months of outflows.

Global was the best-selling equity fund region in July 2021, with net retail sales of £1.2bn.

Net retail sales overall remained strong too, reaching £4.8bn in the month, compared with £4.4bn in the previous month. 

Chris Cummings, chief executive of the Investment Association, said low interest rates and an improved dividend outlook had helped fund flows in the past couple of months which typically would be expected to be among the quieter months of the year.

He said: “We are still early on in the inflation story and have not yet seen any moves away from persistent low interest rates, which makes cash saving less attractive and has potentially helped fund flows in the near term.

“An improved dividend outlook has helped to further reduce outflows from the UK Equity Income sector after a sustained period of outflows.

"In the UK, dividends are not only a source of income but are also an important driver of returns and it is encouraging to see another inflow of £295m to the UK All Companies sector.”

Responsible investment funds saw inflows of £1.4bn, with funds under management standing at £81bn as of the end of July. Their overall share of industry funds under management was 5.3 per cent.

The best-selling IA sector was Global, with net retail sales of £862m, while the worst-selling sector was Corporate Bonds with outflows of £205m. 

In terms of distribution channels, gross retail sales for UK fund platforms totalled £13.8bn, representing a market share of 53.4 per cent, while sales through other intermediaries including IFAs were £6.6bn, representing a market share of 25.7 per cent. 

Direct gross retail sales in July were £782m, representing a market share of 3 per cent. 

Meanwhile tracker funds saw healthy inflows of £1.7bn, with total funds under managements standing at £280bn at the end of July. Their share of industry funds under management was 18.3 per cent.

Nafeesa Zaman is a freelance reporter for FTAdviser