NEWSLETTER: Money sticks to ethical and tracker funds, says IMA

Ethical and tracker funds have been more successful at holding on to assets in the downturn than other types of funds – at least in the UK. This is according to statistics from the UK Investment Management Association (IMA) released last week.

Both tracker and ethical funds saw their funds under management drop in the fourth quarter of 2008 in line with industry trends – from £20.9bn to £19.8bn over the year in the case of tracker funds, and from £4.8bn to £4.4bn in the case of ethical funds. However, net inflows held up reasonably well in both categories.

Tracker funds registered net retail inflows of £280.2m in the fourth quarter of 2008, compared with net retail outflows of £33m in the third quarter of 2008 and of £59.6m in the fourth quarter the previous year. For ethical funds, net retail sales totalled £54.8m in the fourth quarter of 2008, higher than the previous quarter’s figure of £20.5m, but lower than the figure of £99.7m for the fourth quarter the previous year.

For the whole of 2008 net retail sales of tracker funds exceeded 2007 levels, with 2008 net retail inflows totalling £308.3m compared with outflows of £108.9m in 2007. In the ethical sector total net retail sales were positive at £152.4m in 2008, but down on 2007 levels of £472.8m.

For the entire UK industry, net retail sales in totalled £3.9bn in 2008, down from £9.5bn in 2007. Fourth quarter 2008 net retail sales were £2bn, compared with net outflows of £528m in the third quarter of 2008 and net inflows of £208m in the fourth quarter the previous.

Commenting on the tracker and ethical figures, Richard Saunders, chief executive of the IMA, said: “Tracker funds saw their highest quarterly retail sales since 2002, and made a significant contribution to the net inflows to equity funds in the period. Sales of ethical funds continued at a steady rate, but they continue to be a relatively small proportion of the whole.”

In fact, ethical funds account for just 1.1% of total funds under management in the UK, a figure which has remained largely constant since 2002. The UK Social Investment Forum (UKSIF) has nonetheless taken heart from the latest IMA figures, which it says show ethical investors are ‘sticky’ and well adjusted to weather the storms currently raging around them.

“Green and ethical investors take a long-term perspective even in difficult markets,” said Penny Shepherd, chief executive of UKSIF. “Ethical funds saw retail inflows exceeding outflows every month since last February in spite of the turmoil of 2008. Our members confirm that investors continue to support ethical funds.”

Fional Rintoul, Editorial Director
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