View more on these topics

Fixed income funds see £333m outflows

Godfrey Daniel Investment Association 2015

Fixed income funds have seen net outflows of £333m in August as investors stick with equities, according to the latest figures from the Investment Association.

Fixed income net outflows were the largest since June 2013, according to IA, and much larger than the £42m seen in July.

Investment Association chief executive Daniel Godfrey says: “In terms of asset allocation, investors appear to be sticking with equities – particularly equity income funds – whilst withdrawing money from bonds, perhaps in expectation of an interest rate rise.”

Tilney Bestinvest managing director Jason Hollands agrees that investors are wary of fixed income as all eyes are on the US interest rates hike.

He expected a higher demand for targeted absolute return funds given their extra layer of protection, with the funds seeing £243m of net retail sales in August.

“[Fixed income] outflows could yet become a stampede prompting mutterings about a potential liquidity crunch for bond funds with the [Securities and Exchange Commission] asking US mutual funds to wargame how long it might take to unwind positions.

“Against this backdrop, absolute return strategies are seen as a more palatable option for reducing portfolio volatility. At least for those investors who don’t especially need yield.”

Meanwhile money poured out of Asian equity funds, the worst-selling region in August, with net retail outflows of £314m – marking the highest outflow on record for the region.

Equity was the best-selling asset class for the fourth consecutive month with net retail sales of £503m, compared to just £2bn a month before, while at a sector level, UK Equity Income was the most popular sector with net retail sales of £520m.

Total net retail sales were down to £690m, which was the lowest since January 2015 when they reached £401m and a large drop from the £3bn seen in July.

Godfrey says: “Market volatility may have made investors more cautious in August, reinforcing a tendency for sales to dip over the summer period.”

Recommended

Online-Shopping-Supermarket-Platform-Technology-700.jpg

IFDS appoints ex-Cofunds director as COO

Technology firm IFDS has appointed Stephen Mohan as chief operating officer of its platform solutions business. Mohan joins from Allfunds Bank S.A., where he was head of the UK and Ireland. He previously spent eight years at Cofunds, where he was managing director of operational services. In his new role he will report to IFDS […]

Linda Woodall 700 x 450
19

FCA advice boss backs away from cutting regulation

The FCA’s newly appointed advice boss has told a Labour fringe meeting that loosening regulation to encourage new players to offer advice “is not the right way forward”. Speaking on a panel at the conference in Brighton today, FCA director of life insurance and advice Linda Woodall said the watchdog should not reduce regulatory demands […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment