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Equity funds remain best-sellers for eighth consecutive month

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Investors ditched fixed income funds - corporate bond portfolios in particular - and opted for UK and European equities in November.

The latest statistics from the Investment Management Association (IMA) revealed equities dominated, with net retail sales of £935m in November – its eighth month as the best selling asset class.

The majority of the flows were focused on UK and European equities, with net retail sales for UK equities jumping to £409m – more than two-and-a-half times the average for the previous twelve months. European equity sales were also well above average, at £240m.

Japanese equity funds also took their share with £117m of net retail sales, the highest level since February 2011.

By contrast, net retail sales for Asian and global equities fell below the 12 month average, and North America saw a £63m outflow of equity funds.

However, the real fall was for bond funds, with the Corporate Bond sector the worst performer of the month, with outflows of £149m.

Bestinvest managing director Jason Hollands said: “UK, European and global funds led the popularity tables but Japanese equity funds, long out of favour with investors, have also posted their highest net sales since February 2011.

“It is clear that UK recovery fever and eye-popping stock market gains on developed markets have resulted in very buoyant retail inflows into the market.”

The prospect of rising interest rates in the UK and US means countries where monetary stimulus continued, such as Japan, could offer better opportunities in 2014, he added.

His comments come after Ruffer investment trust directors Hamish Baillie and Steve Russell argued Japan offers the best opportunities for equity risk due to the government’s proactive measures.

Total funds under management in IMA funds climbed 16% on November 2012, to £763bn, thanks to net retail sales of £1.6bn over the last year.

Mixed investment 20-60% shares topped the sectors for net retail sales. UK All Companies came second, with net retail sales of £232m, compared to a monthly average over the past 12 months of a £71m outflow. Property also performed strongly.

In terms of retail distribution, UK fund platforms increased their market share in November to half of the market. Other intermediaries, including wealth managers, stockbrokers and independent financial advisers, represented a market share of 42%.

IMA chief executive Daniel Godfrey said: “We saw a continuation of strong investment fund sales in November last year – the top five best-selling IMA sectors indicate that investors are favouring equity and mixed asset funds with property funds also doing well.”

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