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Retail fund sales lowest in 10 years

Net retail fund sales in Britain fell by nearly 75% from 2006 to 2008, from a high of £15.3 billion in 2006 to £3.9 billion in 2008, according to sales from the Investment Management Association (IMA).

A recovery has since become evident, with net retail sales this year to the end of May totalling over £8.3 billion.

However, the 2008 figure is the lowest in the IMA’s records, which stretch back 10 years.

In a presentation at the Institute of Economic Affairs and Marketforce conference, “The Future of Fund Management”, in March, Chris Taylor, the chief executive of Blue Sky Asset Management, a structured products provider, argued the drop showed a loss of faith by investors because “many traditional funds simply fail to deliver”.

However, Mark Dampier, the head of research at Hargreaves Lansdown, says the dip represents long-term market trends playing out into the retail investment market. “You’ve had two 50% falls in the market in less than 10 years – that’s unprecedented … Markets peaked in valuation terms about 10 years ago, and if you look at it over a buy and hold period, you haven’t made any money.”

Investors’ bad experiences were compounded by negative commentary and changes to tax breaks on investment during the Labour government, Dampier says.

But the media predicting the death of equity investment is “almost a definite buy sign,” he adds. “The more I see in the national papers saying ‘equity investment is dead’, the more I know it’s the right thing to do .. Probably those IMA figures mean the next five to 10 years will be considerably better.”

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