UK stocks are in demand with ISA investors, according to the latest sales statistics from the Investment Management Association. Investors deposited a total of £555 million in UK equity funds, a significant increase on the £315 million monthly average retail sales over the previous year.
The most popular funds among ISA investors using five of the largest online platforms - Cofunds, Fidelity, Hargreaves Lansdown, Skandia and Transact – were UK Smaller Companies, which took £34 million last month. After the UK Smaller Companies sector, ISA investors favoured UK All Companies which took inflows of £32 million and UK Equity Income, with sales of £29 million.
Among non-ISA investors, the sector with the largest number of sales last month was UK All Companies which recorded inflows of £371 million. This bias shows British investors are confident about the outlook for domestic stocks.
Tom Stevenson, investment director at Fidelity said that 18% of people who plan to invest through their ISAs this tax year will do so this final week.
“The IMA stats this week showed UK equity funds top of the list for investors in February. That makes sense. The UK economy is in good shape and the UK market is anyway a good play on overall global recovery,” he said.
“The valuation differential between the FTSE 100 and the smaller indices has widened further making the blue-chips look relatively attractive.”
Property was a surprise hit, with property funds selling £298 million, the second most popular sector for February. Property prices rose an average of 7% last year, and the average UK house price has now surpassed £250,000. The London market has nearly doubled that pace, rising 13% last year. This national growth, along with extended government policies to support the housing market, has boosted investors’ confidence in the sector.
February was the 11th consecutive month that net retail sales exceeded £1 billion, as investors deposited a total of £1.8 billion in open-end funds.
Passive funds also proved extremely popular, with tracker funds taking inflows of £445 million for the month of February compared to inflows of just £145 million the previous year.