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UK fund buyers defy rate fears as bond sales top charts

Bond funds continued to top the sales charts in January, before fears over interest rate rises sparked a drop in stock markets.

UK fund buyers defy rate fears as bond sales top charts

Bonds took the top spot in the Investment Association (IA) sales figures for the eighth consecutive month in January, on net retail inflows of £1.6 billion.

Sterling strategic bond was the best-selling sector, attracting £808 million over the first month of the year.

‘Flows into fixed income products may seem at odds with expected rate rises in the UK, however, sterling strategic bond funds are able to invest globally and hedge currency exposure, therefore, they are not necessarily taking on UK interest rate risk,’ said Alastair Wainwright, IA fund market specialist.

Ahead of February's sharp correction and uptick in volatility, equity was the second best selling asset class with £977 million in net retail sales, followed closely by mixed assets, which saw £941 million in inflows.

Investors also continued to look for global diversification, pouring £675 million into global equities.

Asia funds attracted £303 million, while Japan, Europe and North America experience net retail sales of £295 million, £286 million and £118 million, respectively.

The worst-selling was the specialist sector which saw an outflow of £444 million. Property funds saw one of the lowest inflows compared to other sectors, attracting £76 million over the month.

Those classified as 'other', including targeted absolute return, volatility managed and protected, saw inflows of £298 million.

Within passives, there was a clear preference for equity funds, which saw £533 million in net retail sales out of the total £861 million allocated.

Wainwright added: ‘Looking at retail distribution, we have been seeing a slow but steady reduction in fund platforms’ dominance throughout the past year.

'Their market share in January 2018 was 37% of gross sales, which was notably lower than their 46% share a year ago. At the same time, the financial adviser market share has increased from 27% in January 2017 to 36% in January 2018.

'A number of factors may be driving this shift such as non-advised investors turning to financial advisers or advisers moving off platforms and investing directly with fund managers.’


1 comment so far. Why not have your say?

The Spanish Inquisition

Mar 08, 2018 at 18:02

As Martin Armstrong says "The majority has to be wrong" just before any change in trend.

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