Absolute return funds have witnessed their largest outflows for the last three years, the latest Investment Management Association’s figures show.
The IMA absolute return UK sector was hit by net retail outflows of £122m during August. This is the largest outflow recorded since the sector was formed in April 2008 and compares with the average monthly inflow of £162m for the past year.
The sector has faced criticism in recent months. Fitch Ratings and Standard & Poor’s Fund Services claimed that many absolute return funds have failed to meet their targets, while there is evidence that some investors are confused over the definition of the term.
August was the highest selling month on record for the IMA global sector, according to the association’s figures.
Net retail sales of global equity funds amounted to £337m last month, which is a new record despite being only marginally ahead of the £332m reported for June. The sector has sold £1.8 billion in the year to date.
IMA UK equity income was the second most popular sector during August, achieving net retail sales of £211m – its highest since May 2007. The IMA cautious managed sector came in third with net sales of £198m, while IMA balanced managed was fourth with £156m.
Jane Lowe, the IMA’s director of markets, says: “Despite volatile markets in August, net retail sales of funds remained steady, with investors adding £1.1 billion to their portfolios.
“Interestingly, investor appetite for equities was strong in August, with net retail sales of £515m.”