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Developed market equity funds continue to see outflows, says IMA

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UK equity funds saw their largest outflow on record, with net outflows of GBP864 million in November, compared to a monthly average inflow of GB506 million for the previous twelve months, according to the latest figures released by the Investment Management Association (IMA). Equity funds have seen net outflows in four of the last five months, following over two years of net inflows.

For the third month running, the highest selling asset class was Bonds, with net retail sales of GBP443 million, above the monthly average of GBP332 million for the previous twelve months.

Balanced funds were the second highest selling asset class when excluding the ‘Other’ category. Net retail sales of Balanced funds totalled GBP262 million in November, the lowest since April 2009 and well below the monthly average of GBP493 million for the previous twelve months.

November saw net retail sales of GBP267 million, the lowest level since October 2008 and significantly down on the monthly average of GBP1.7 billion for the previous twelve months. Year to date net retail sales totalled GBP16.7 billion, compared to 2010’s GBP25.6 billion.

Funds held within ISAs saw a net outflow of GBP28 million in November, the highest outflow since February 2009. Year to date net ISA sales totalled GBP3.2 billion, behind 2010’s GBP3.9 billion.

Funds under management in November totalled GBP560.3 billion, down 3% on October. Funds under management for ISAs totalled GBP99.7 billion in October 2011, down 4% on October.

Cautious Managed* was the best selling IMA Sector, with net retail sales of GBP176 million in November, but down on the monthly average of GBP288 million for the previous twelve months. Following three months of outflows, Absolute Return-UK was the second most popular IMA Sector with GBP164 million in net retail sales in November, the highest level since June 2011 and well above the monthly average of GBP81 million for the previous twelve months.

Balanced Managed was the third most popular IMA Sector in November, with net retail sales of GBP156 million, slightly below the average of GBP175 million over the previous twelve months. Net retail sales of GBP Corporate Bond, the fourth most popular IMA Sector, totalled GBP151 million in November.

UK Gilts, the fifth highest selling sector, had net retail sales of GBP99 million, above the monthly average of GBP35 million for the previous twelve months.

The lowest selling sectors were all equity sectors, as outflows remained concentrated in developed market equity sectors. The bottom five selling sectors, Specialist, North America, Europe excluding UK, UK Smaller Companies and UK All Companies, accounted for a combined net outflow of GBP728 million, out of a total equity outflow of GBP864 million. The UK Smaller Companies sector saw its greatest monthly outflow since July 2006.

As of 1 January 2012, the Cautious Managed Sector has been re-named and re-defined as Mixed Investment 20-60% Shares, while the Balanced Managed Sector has been re-named and re-defined as Mixed Investment 40-85% Shares.

Gross retail sales for ‘Other Intermediaries’ – which includes Wealth Managers and Stockbrokers – totalled GBP3.6 billion for November. ‘Other Intermediaries’ represented 47% of total sales, the largest market share.
Gross retail sales through Fund Platforms* totalled GBP3.3 billion in November, taking 42% of total market share, up from 39% a year earlier.

Direct channels’ gross retail sales dropped to GBP896 million in November. Sales through direct channels accounted for 11% of total sales.

Funds under management for Fund Platforms were GBP106.7 billion in November 2011. Across all products (ISAs, Insurance Bonds, Personal Pensions, Unwrapped), gross sales through Fund Platforms were below the monthly averages for the previous twelve months. Shares of gross sales across products were in line with recent trends.

Overseas domiciled funds saw net retail outflows of GBP84 million in November 2011, compared with a monthly average inflow of GBP151 million for the previous twelve months.

“The second half of 2011 has seen a marked slowdown in fund sales from the exceptionally strong levels of the last three years, and there was no let-up in November, which saw the lowest monthly net sales since October 2008,” says Richard Saunders (pictured), Chief Executive at the IMA. “Investors favoured bond funds in November, while sales of absolute return funds bounced back from previous low levels. Equity funds experienced significant outflows, mainly from UK, European and North American equity funds.”

 

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