Save, make, understand money

Experienced Investor

Investors plough £24bn into funds

Emma Lunn
Written By:
Emma Lunn

The fund market has seen a strong first half of the year with total net retail sales of £24bn, the highest level of half-year sales since 2017.

According to the Investment Association (IA), tracker funds enjoyed continued strong inflows in June, with net retail sales of £2.2bn against total retail sales of £4.2bn.

Responsible Investment funds saw more than £1bn of inflows in June, and a total of £4bn for Q2 – the highest quarterly inflows since the IA started collecting data. Responsible investment currently represents 5.1% of industry funds under management and have the potential to grow this share, with investors able to access to an increasing number of options in this area.

As inflation rises, the newly launched Global Inflation Linked Bonds sector was the highest selling fixed income sector at £214m.

Chris Cummings, chief executive of the Investment Association, said: “The positive inflows for the first half of the year are a clear sign of the strong economic recovery and growing investor confidence as we emerge from the pandemic. If the pace of net sales continues at the same rate, we could be on track to match the record-breaking inflows of 2017. However, investors also have one eye on inflation, which may have a greater impact in the second half of the year.”

UK funds was the only equity fund region that experienced outflows, with net retail sales of -£77m. Earlier this week the government proposed an ‘investment big bang’ to get UK money flowing into private UK companies.

Tom Mills, senior investment analyst at Hargreaves Lansdown, said: “The global sector was the best-selling IA sector in June, and equities as a whole were the best-selling asset class, indicating that UK investors continue to have a positive outlook for global share markets, which have benefitted from the ongoing economic recovery.

“Despite the strong performance of UK shares so far in 2021, the UK was the only equity fund region to see net outflows in June. But this mostly came from persistent outflows in UK equity income funds, which have been reducing in popularity, while UK All Companies funds attracted net inflows in June.

“Rising inflation is also an important consideration for investors and the new Global Inflation Linked Bonds Sector was the fourth best-selling IA sector during June, and the best-selling of the fixed income sectors. Inflation linked bonds are designed to provide a shelter against inflation.”