Equity fund inflows beat bonds for first time in a year

Inflows to equity funds have outstripped fixed income funds for the first time in a year as investor sentiment begins to lift.

Equity funds were the leading asset class for September with net retail sales of £541 million, according to The Investment Management Association (IMA). This beat the fixed income sector, which has led the pack for each of the last 12 months but only saw sales of £320 million during September.

‘Net retail sales were again above £1 billion in September, reversing the unexpected outflows seen in August. Overall net retail sales of equity funds outstripped income for the first time in a year,’ said Jane Lowe, IMA director of markets (pictured).

She added that there had been a ‘notable’ outflow from UK equity growth funds but that a focus on income is still clear.

In another sign of growing investor confidence, net retail sales hit their highest since May 2012, at £1.1 billion.

European equity funds have also blossomed, seeing their first net retail inflow for 18 months.

Net retail sales for European equity was £150 million, compared to the UK region which was the worst selling and saw £51 million in outflows.

Drilling down in to sectors, the Absolute Return UK space hit the highest net retail sales and saw the best monthly performance for three years, with £193 million in inflows. This far exceeds the monthly average of £58 million over the last year.

Strategic Bonds came out as the second best-selling sector, and was the only fixed income sector in the top five.