Investment in UK retail funds saw a reversal of fortunes in April with £553mn invested.
The positive flows were compared to net withdrawals of £3.5bn the previous month, according to the Investment Association.
April marked ‘Isa season’ as the Isa year runs from April 6 to April 5, however the fund flows sat below the figure seen last year.
Savers plugged £683mn into funds via an Isa wrapper in the four weeks, well below the £1.4bn invested in April 2021.
In total the 2022 Isa season saw net inflows of £934mn, slightly above the five-year average of £922mn.
Isa season net sales
| March net Isa sales | April net Isa sales | Isa season total |
2018 | £338mn | £888mn | £1,225mn |
2019 | -£56mn | £252mn | £196mn |
2020 | -£713mn | £725mn | £11mn |
2021 | £798mn | £1,444mn | £2,242mn |
2022 | £251mn | £683mn | £934mn |
Source: Investment Association
Miranda Seath, head of market insight at the IA, said: “Although inflows to Isa wrappers, based on IA data, were half those of 2021, they were still the third strongest in the last 5 years.
“This is significant as April’s positive sales come after one of the most challenging first quarters for retail fund flows on record.”
Fixed income saw a large turnaround between March and April this year, with £18mn withdrawn in April compared to £3.3bn redeemed in March.
Investors are also looking for alternative sources of income from bondsMiranda Seath, IASeath said the weaker outlook for share price growth has led to company dividends being an increasingly important contributor to the overall returns investors could make from equities.
“This was not just driven by investors looking for alternative sources of income.
“As the outlook for equity growth weakens, investors have looked for funds investing in companies that pay good dividends consistently to top up the overall returns equity investors receive.”
“Investors are also looking for alternative sources of income from bonds.”
Equity funds fared slightly worse with £435mn withdrawn in April, compared with £340mn redeemed in March.
Global equity income was the best selling IA sector in the four weeks, with inflows of £678mn.
Responsible investment funds also had a good month, with inflows increasing 28 per cent to £1.2bn compared with March.
Top fund and investment trust buys in April on Hargreaves Lansdown’s platform
Top Funds, April (net buy, alphabetical) | Top Investment Trusts, April (net buy, alphabetical) |
Baillie Gifford American | BlackRock World Mining Trust |
Baillie Gifford Managed | Capital Gearing Trust |
Fundsmith Equity | City Of London Investment Trust |
IFSL Marlborough UK Micro-Cap Growth | Edinburgh Worldwide Investment Trust |
JPMorgan Emerging Markets | Gore Street Energy Storage Fund |
LF Lindsell Train UK Equity | Greencoat UK Wind |
Lindsell Train Global Equity - Distributing | Monks Investment Trust |
Rathbone Global Opportunities | Ruffer Investment Co |
Schroder Managed Balanced | Scottish Mortgage Investment Trust |
Troy Trojan (Class X) | Witan Investment Trust |
Souce: Hargreaves Lansdown
Head of investment analysis and research at Hargreaves Lansdown, Emma Wall, said while markets have returned to some stability a month on, the outlook remains challenging.
"Central banks have committed to higher rates in a bid to counter inflation, war continues to ravage the Ukraine with devastating human impact and continued uncertainty for energy prices and global food supply.
"Most economists are agreed that 2023 will bring recession, and tightening spending – consumer, corporate and country – will negatively impact global markets. Investors should consider their risk appetite carefully, and ensure their portfolio is positioned to weather the upcoming headwinds.”
sally.hickey@ft.com
