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Tracker fund business reaches a record high

Net tracker fund sales hit a record high of £661m in the first quarter of the year, according to latest figures from the Investment Management Association.

Net retail sales of trackers rose by 25 per cent from £528m in the first quarter of 2011 to £661m this year. This is the highest net sales figure since the IMA’s records began in 1992.

Tracker funds under management reached £43.3bn in the first quarter, rising 7 per cent from £40.3bn in the opening three months of 2011.

In contrast, net retail sales of fund of funds fell 77 per cent from £1.7bn in the first quarter of 2011 to just £396m this year. Funds under management in the class rose by 9 per cent to £64.2bn from £58.8bn in 2011.

Net sales of ethical funds fell to £26m, down by 69 per cent from £85m in the first quarter last year, while assets under management stayed constant at £7.2bn.

The total assets held in all funds fell to £3.8bn at the end of the first quarter, down by 39 per cent from £6.2bn.

Evolve Financial Planning director Jason Witcombe says: “The rise in popularity of trackers does not surprise me. More and more advisers are recommending them to clients and the consumer press has run a lot of stories about the high costs of active fund management of late, so the general public is being more inquisitive about fund costs.

“Selection of passives will be driven by cost, as one would expect all funds to do what they say on the tin in terms of tracking an index. Advisers will also look to those firms who go that extra mile in terms of producing useful research to support the index tracking proposition, which can be passed on to clients.”

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