Fund flows turn positive in ISA season boost

Investors put £553 million into funds in April 2022, according to data published today by the Investment Association (IA). April’s inflow follows a £3.5 billion outflow in March. After pulling £7.1 billion out of funds in Q1 2022, a record quarterly outflow, April’s data suggests that ISA season* has helped to boost sales to retail funds.

Other key findings for April 2022 include:

• ISA season: savers placed £683 million into funds via an ISA wrapper in April. Although down from £1.4 billion in April 2021 at the end of the UK’s third lockdown, the 2022 ISA season overall saw net inflows of £934 million. This is just above the average inflows of the last five years (£922 million) despite the challenging start to the year for overall fund flows (see table).
• Fixed Income fund outflows stabilised to £18 million in April, down from £3.3 billion in March the month in which both the US Federal Reserve and the Bank of England raised rates (which can reduce the appeal of fixed interest payments on bonds, relative to cash interest rates).
• Global Equity Income was the bestselling IA sector in April with inflows of £678 million. With a weaker outlook for share price growth, company dividends have become an increasingly important contributor to the overall returns investors could make from equities. Investors are also looking for alternative sources of income from bonds.
• Responsible investment funds saw inflows increase by nearly 30% in April, rising to £1.2 billion – up from £935 million in March.

Miranda Seath, Head of Market Insight at the Investment Association, said:

“Savers returned to the fund market in April as we saw inflows boosted by ISA season. Although inflows to ISA wrappers, based on IA data, were half those of 2021, they were still the third strongest in the last 5 years. This is significant as April’s positive sales come after one of the most challenging first quarters for retail fund flows on record.

“The IA Global Equity Income sector became the top-selling IA sector for the first time in April. This was not just driven by investors looking for alternative sources of income. As the outlook for equity growth weakens, investors have looked for funds investing in companies that pay good dividends consistently to top up the overall returns equity investors receive.”

ISA SEASON NET SALES

FUNDS UNDER MANAGEMENT AND NET SALES 

BEST SELLING INVESTMENT ASSOCIATION SECTORS   

The five best-selling Investment Association sectors for April 2022 were: 

1. Global Equity Income with net retail sales of £678 million.
2. Mixed Investment 40-85% Shares was second with net retail sales of £468 million.
3. Volatility Managed followed with net retail sales of £440 million.
4. Specialist Bond was fourth with net retail sales of £293 million.
5. North America was fifth with £257 million.

The worst-selling Investment Association sector in April 2022 was UK All Companies, which experienced outflows of £486 million. 

NET RETAIL SALES BY ASSET CLASS 

Mixed Asset funds was the best-selling asset class in April 2022, with £576 million in net retail sales. 

Other funds (which includes the Targeted Absolute Return, Volatility Managed, and Unclassified sectors) was the second best-selling asset class, with £457 million of inflows. 

Property saw £5 million in outflows in April 2022.

Fixed Income funds was fourth with outflows of £18 million.  

Money Market funds saw £22 million in outflows.

Equity funds saw £435 million of outflows.

NET RETAIL SALES OF EQUITY FUNDS BY REGION* 

North America was the best-selling equity fund region in April 2022, with net retail sales of £241 million.

Global was second with net retail sales of £148 million. 

All other equity regions experienced outflows.

Japan funds saw £93 million in outflows, while Asia funds saw outflows of £153 million.

Europe funds saw outflows of £482 million, and UK funds saw outflows of £689 million.

TRACKER FUNDS 

Tracker funds saw a net retail inflow of £1.5 billion in April 2022. Tracker funds under management stood at £293 billion as of the end of April. Their overall share of industry funds under management was 19.6%. 

RESPONSIBLE INVESTMENT FUNDS 

Responsible investment funds saw a net retail inflow of £1.2 billion in April 2022. Responsible investment funds under management stood at £86bn as of the end of April. Their overall share of industry funds under management was 5.8%. 

GROSS RETAIL SALES BY DISTRIBUTION CHANNEL 

In April, gross retail sales for UK fund platforms totalled £14 billion, representing a market share of 50.1%.  

Gross retail sales through Other UK Intermediaries including IFAs were £8.3 billion, representing a market share of 27.8%.  

Direct gross retail sales in April were £1.1 billion, representing a market share of 3.8 %.  

ENDS