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Fund of funds sales more than halve to £2.2bn

Fund of funds net retail sales more than halved from £4.6bn in the first nine months of 2011 to £2.2bn this year, according to the Investment Management Association.

Fund of funds assets under management have grown over the past nine months however, to £67.5bn at the end of the third quarter. This is up 18 per cent from £57.4bn at 30 September 2011.

The IMA says fund of funds have now reached a record 10.7 per cent of total funds under management.

Chief executive Richard Saunders says: “Funds of funds continued to be popular with investors in the third quarter of 2012.

“While sales were lower than a year ago, in common with the wider industry, total funds recorded another new high relative to the industry as a whole.”

Mixed asset funds were the most popular during the third quarter, accounting for 57 per cent of funds under management for the funds of funds sector.

Funds of funds in the IMA Unclassified sector were the biggest seller over the period, generating net retail sales of £467.8m. The sector with the biggest funds of funds outflows was the multi-asset IMA Flexible Investment sector, which saw redemptions of £90m.

Skerritt Consultants head of investments Andrew Merricks says the downturn in sales of funds of funds “is probably a capacity issue”.

He says: “Funds of funds were introduced as an answer to everybody’s worries and a number of people would have been attracted to them initially. There may now be a natural drop-off in investment.

“There has probably been a lot of shuffling around from fund of funds manager to fund of funds manager. I imagine it is the case that the number of advisers who use them is finite and they cannot keep transferring them from one to the other.”

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