Boosted investor confidence drives April inflows

coronavirus_inflowsInflows into UK-domiciled active funds almost matched their passive counterparts in April, marking a distinct change in investor sentiment compared to previous months, data from Morningstar has shown.

Overall, £4.8 billion (€5.3 billion) was added to UK funds (excluding money market funds) – a “stark contrast” to March which saw record outflows as the impact of the Covid-19 pandemic took its toll.

According to the report, inflows have been primarily driven by passive vehicles at the cost of active strategies in recent months – but April saw both passive and active funds roughly splitting the influx of cash 50/50.

Equity took the lion’s share of investment, bringing in £4.9 billion, whilst fixed income only attracted £169 million. Equity funds, as well as passive UK and US strategies were said to be the driving force behind the positive flows.

Alternatives remained firmly out of favour, however, with investors pulling out £852 million from the asset class, whilst property funds also saw redemptions of £33 million.

Bhavik Parekh, associate analyst, manager research at Morningstar, said: “The end of March and the whole of April saw equity markets rising, especially in the US which saw one of its best months in many decades. This sharp and sustained change in direction gave some investors' confidence that the bottom had been reached and they invested heavily in risker assets.”

In terms of individual fund managers, BlackRock and Vanguard saw high net inflows into their passive vehicles totalling £1.7 billion between the two, whilst active houses Baillie Gifford and Fidelity also saw strong investor interest in April.

Invesco continued to see high net outflows of £766 million in April bringing the total net outflow over the past 12 months to £10.5 billion, according to the report.

© 2020 funds europe

Top features in May

Irish ETFs: Covid’s challenge to ETF project deadline

Ireland seeks greater efficiencies for its ETF industry, but lockdown threatens to delay a key plan to upgrade operations before the end of the year. Nicholas Pratt reports.

Association column: Where do we go from here?

The gravity of what is happening as a result of Covid-19 casts a long shadow over other thoughts. Accompanying the shock, distress and grief, the demonstrations of selflessness, compassion and resilience have lifted our collective spirit. We are indebted to all those who do the extraordinary for others.

Exchange-traded funds: With flying colours?

ETFs recently marked their 20th birthday in Europe amid uncertainty and volatility. The Covid-19 crisis has hit indices hard but opportunities in these index-based investments still exist, say experts.

Technology: Tech will ‘democratise’ wealth management

With the help of technology, retail investors will be able to access assets previously available only to institutional clients. Bob Currie reports on new research by Funds Europe and Calastone.

Post-Covid-19: There’s no going back

Covid-19 has prompted fund managers to consider how the world will change – perhaps forever – in terms of globalisation and, notably, the response to climate change. By Alex Rolandi.