UK data supports great rotation theory

SharesFebruary was the second consecutive month of outflows for fixed income funds in the UK, amounting to £163 million (€192.8 million), data from the Investment Management Association (IMA) shows.

Monthly outflows of fixed income funds were the highest level since July 2008, when the IMA recorded outflows of £190 million.

In comparison, fixed income funds attracted £612 million in net retail sales in February last year.

This time, however, four of the top five best-selling sectors in the UK were equity sectors in February. The latest data supports the great rotation theory that money is being shifted from equities to fixed income.

It was also the sixth consecutive month where equity funds were the best-selling asset class, with net retail sales of £940 million. This is the highest number since April 2011, when net retail sales were £1.2 billion.

Among equity funds, global equity was the best selling region, with net retail sales of £297 million, followed by European equity funds, with net retail sales of £258 million.

Both UK and Asian equity funds saw “substantial” retail inflows, the IMA says. The £190 million net inflows for the UK were particularly noticeable, given the outflows of £215 million in January.

Only North America equity funds saw outflows - £31 million – in February.

Mixed asset was the second best-selling asset class, with net retail sales of £377 million, compared to £125 million in February last year.

Assets under management reached record levels at £706 billion, a 14% increase over the past 12 months.

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