Net fund flows positive but fixed income funds decline

The Investment Association (IA) today released fresh data showing significant shifts in the investment landscape. Despite the overarching positive tone in net fund flows, fixed-income funds seem to be losing investor appeal.

One of the standout figures is the doubling in inflows into tracker funds. The data shows these funds attracted £1.6 billion in August, an increase from the £860 million recorded in July.

On the other hand, fixed-income funds experienced a dip in interest. Outflows reached £356 million, marking the first time since October 2022 these funds have seen a negative trend. This comes as a surprise to many, given the consistent popularity of this fund type over the past year.

Conversely, responsible investments faced a significant setback. There was a record outflow of £448 million from these funds. This followed a period characterised by weaker sales, raising concerns about the sustainability of interest in these investment vehicles.

The Global sector came out as the clear winner this month. Net retail sales reached £368 million, making it the best-selling sector for August. By contrast, the global equity income sector had a less favourable month, recording outflows of £66 million. This marks the first time since November 2021 that this sector has seen a dip.

Emma Wall, head of investment analysis & research, Hargreaves Lansdown, said, “Positive flows into funds through August is good news – despite the challenges of inflation, economic uncertainty and strikes, retail investors continued to save. But the net figure masks a mixed bag.

“Fixed-income funds fell in popularity as bond value fell as yields rose and cash presented an attractive alternative low-risk asset. Global equity – particularly passive funds – has proved popular as an easy instant cross-market exposure in a market where making a tactical call is tough.”

© 2023 funds europe

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