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Investment funds hit record high


Laith Khalaf (pictured), Senior Analyst, Hargreaves Lansdown comments on news that investment funds under management have reached a new record high…

Investment funds under management hit a record high of GBP871 billion in 2015, according to data released by the Investment Association this morning.
This is despite the turmoil in markets we saw in the latter half of the year as a Chinese slowdown and commodity rout dented investor sentiment.
UK Equity Income was once again the best-selling asset class of the year. Meanwhile tracker funds had their best year ever.
Private investors have still been squirrelling money away into their pensions and ISAs despite the choppiness in stock markets seen throughout the latter half of last year. The low interest rate environment has no doubt helped people to invest more by reducing their mortgage payments, as well as making cash savings look relatively unattractive. The pension freedoms introduced last April have also boosted fund sales by encouraging more people to invest some of their pension at retirement, rather than simply buying an annuity.
UK equity income remains the best-selling sector for the second year in a row. This is little wonder given the everyman appeal of dividends as a provider of a valuable income stream in a world hungry for yield, as well as a source of growth if re-invested. Income fund managers may find they have to work a little harder to earn their crust in 2016 however, given the dividends of the oil and mining sectors look likely to come under further pressure.
Tracker funds had a fantastic year in terms of sales and we expect further growth in this market as investors plump for either high quality active funds or simple, cheap passive funds, squeezing out the closet trackers in the middle. In performance terms 2015 was a tricky year for UK trackers however, given the high weighting to oil and mining companies required by their strict adherence to the make-up of the Footsie index

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