Investors Pour £1bn into Funds

Latest figures from the Investment Management Association reveal investors poured more than £1bn into funds for the tenth month in a row in January

Emma Wall 4 March, 2014 | 12:51AM
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Investors continue to favour equity funds – pouring more than £1 billion into them in January. This was the tenth consecutive month that equity funds proved more popular, and the tenth month in a row open-end funds saw inflows of more than £1 billion.

Within the equity sector UK and Europe proved the most popular region, with UK equity funds seeing sales of £644 million – nearly two thirds of total fund sales, according to the latest figures from the Investment Management Association (IMA).

Aside from equity, property was the second best-selling asset class, taking inflows of £232 million – the highest since March 2010. Both residential and commercial property have seen a significant uptick in value over the past 12 months helping to fuel appetites for property funds.

In contrast, fixed income saw outflows of £229 million in January – despite the fact that fixed income has outperformed equity investment so far this year. This may be a positive sign as investors are snapping up contrarian bets on equity markets while values are depressed.

While UK equity funds saw inflows of £644 million, Asian equity funds did not fare as well. Concerns about volatility and liquidity in emerging markets caused investors to withdraw £235 million from Asian equity funds. US equity funds also saw outflows as investors chose to take some of the profit accrued over the past two years while US equities have rallied. European equity funds saw inflows of £261 million.

While UK equity was the best-selling region, Absolute Return funds were the most popular IMA sector. Targeted Absolute Return funds sold £343 million, the highest since December 2009. UK Smaller Companies also proved popular selling £241 million.

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Emma Wall  is former Senior International Editor for Morningstar