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Which Funds are Investors Buying?

UK equity income funds proved most popular with investors last month - with both Neil Woodford's new offering and his old Invesco fund in the top 10 most popular

Emma Wall 29 July, 2014 | 11:55AM

Investors poured cash into UK equity income funds to the tune of £1.4 billion last month according to the latest figures from the Investment Management Association – the highest inflows on record for the sector. This brings total assets under management for UK equity income funds to £52.5 billion.

Property funds also received a boost, with net retail sales of £316 million, making it the second most popular sector and taking assets under management to £19.6 billion. Fixed income continued to wane in popularity with global bond funds seeing outflows of £83 million and UK gilt funds recording sales of £30.4 million.

“June was another strong month for retail fund sales with equity funds again doing well,” said IMA chief executive Daniel Godfrey.

“Property funds continued to be popular, with property the second best-selling asset class in June. Mixed asset funds were not far behind.”

The worst selling IMA sector was not of the fixed income variety however, UK All Companies funds saw outflows of £421.4 million.

Danny Cox of stockbroker Hargreaves Lansdown said this was in part due to investors taking money out of the sector to invest in Neil Woodford’s new equity income fund.

“There was some concern over UK mid and small caps in recent weeks, but the main factor is the success of the Woodford launch was at the expense of UK All Companies funds,” he said.

European Investors Favour Fixed Income

Although UK investing in June was led by home grown equities, European investors favoured bond funds in June.

Across Europe long-term funds enjoyed healthy inflows of €36.12 billion in June, according to Morningstar Direct Asset Flows Commentary. Of these sales, €18.5 billion went into fixed income funds, while equity funds saw inflows of €730 million. Total assets under management in European domiciled funds still have an equity bias however, with fixed income totalling €1.8 trillion, and equity funds equal to €2.2 trillion. The most popular fund sector was Cautious Allocation, which saw inflows of €2.7 billion.

“Fixed-income funds were showered with net new money in June, the highest inflow since May 2013,” said Ali Masarwah of the European Fund Flow team.

“Inflows into equity funds, meanwhile, shrunk, arguably due to profit-taking out of a wide array of global, U.S., and European categories. This was the lowest level of inflows into equity funds seen since the tapering debate temporarily damped investors´ risk appetite in June 2013.”

Most Popular Funds

The Share Centre revealed that the most popular fund on their platform in June was the SWIP Foundation Growth Income fund, followed by Jupiter Global Managed.

As expected however, CF Woodford Equity Income fund featured in the top 10 as did Woodford’s former fund Invesco Perpetual High Income. High Income was also the fourth most searched for fund on Morningstar.co.uk in the month of June.  

 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Invesco High Income UK Inc381.40 GBP0.03
Jupiter Global Managed Acc283.99 GBP0.38
LF Woodford Equity Income A Sterling Acc79.75 GBP-0.46

About Author

Emma Wall  is former Senior International Editor for Morningstar

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