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Fund sales: investors continue to back equities

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Equity funds remained the most popular choice with retail investors for the sixth consecutive month in September, figures reveal.

According to the data from Investment Management Association (IMA), sales of equity funds reached £1.3bn taking the third quarter total to £3.8bn, the highest quarterly figure since the second quarter of 2000.

The firm favourite sector in September was UK Equity Income, which saw sales of £505m during the month, an increase on the £88m pulled in during the same month last year.

Global equity reported sales of £365m while European equity funds brought in £240m.

Other best-selling sectors included Mixed Investment 20%-60% shares, Property, Europe excluding UK and Targeted Absolute Return. The worst-performing sector was £ Corporate Bond which saw outflows of £116m.

Overall fund sales exceeded £2bn in September, taking the third quarter total to £6.3bn, the highest since the second quarter of 2011.

Jason Hollands, managing director of Bestinvest, said: “This provides further evidence that the long-standing love affair with corporate bonds is over, for now.

“With ultra-low interest rates and the potential for further volatility in the bond markets once central banks wind-down their asset-purchase programmes, it is easy to understand why private investors have flocked towards funds with the potential for rising yields as well as capital growth.

“We believe there is still headroom for further dividend increases in the UK stock market next year. Optimism has been buoyed recently by BP increasing its third-quarter pay-out ahead of expectations and then there is potential for banks to ratchet up their distributions as their capital positions improve.”

Bestinvest rates the folllowing UK Equity funds: Cazenove UK Equity Income, Threadneedle UK Equity Income and Fidelity MoneyBuilder Dividend.


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