Fund sales plummet

Net retail sales of investment funds for last December were half those of December 2001.

Morningstar.co.uk Editors 31 January, 2003 | 3:08PM
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Last month net inflows into retail funds were £269m compared with £607m over the same month in the previous year, according to the latest figures from the Investment Management Association. This was also a £231m drop from November 2002.

Funds under management were severely affected by the stockmarket falls of 2002, ending the year at £195m, down from £236m at the start of the year. This drop means last year was the second year in a row that funds under management fell. They also fell by about £16m more last year than they did over 2001.

Retail investors preferred the relative safety of bonds to shares. In December the UK Corpor

ate Bond sector was the most popular for retail investors, taking in a net £291m. Investors favoured this sector overall in 2002, investing more than £2.6 billion.

Bond funds also accounted for a greater proportion of gross retail sales last year. Whereas in 2001 some 19% of overall sales were in bond funds, this figure rose to 24% in 2002.

The UK Equity Income sector was the second most popular last month for retail investors, with £53m in net sales. Europe excluding the UK and North America showed the worst sales figures.

On the institutional side investors favoured the UK All Companies and UK Corporate Bond sectors and shunned those covering the Far East excluding Japan and Europe excluding the UK.

Less money flowed into regular savings plans last quarter. This figure has fallen for seven consecutive quarters.

Confidence survey

These gloomy figures are reflected in the results of the latest Investor Confidence Index from the Association of Investment Trust Companies. Some 51% of the 2,000 individuals surveyed are not intending to use their Individual Savings Account (ISA) allowance for this tax year.

Of the half that said they will invest only 26% plan to put their money into share ISAs as opposed to 61% who favour cash ISAs. The fieldwork for the survey was carried out on January 17th-19th 2003.

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