UK private investors flooded back into equity funds in November, pushing sales into positive territory for the first time in 2016, according to the Investment Association (IA), the trade body that represents UK investment managers. Net retail sales of equity funds reached £583m in November, reversing 10 months of outflows from the asset class.
The most popular IA fund sector was Targeted Absolute Return, followed by Global, Mixed Investment Funds 40-85 per cent Shares and North America. The worst-selling IA sector was £ Corporate Bond, which experienced outflows of £166m.
Top five best-selling IA sectors in November 2016
| Sector | Net retail sales (£m) |
|---|---|
| Targeted Absolute Return | 366 |
| Global | 220 |
| Mixed Investment 40-85% Shares | 183 |
| North America | 168 |
| Mixed Investment 0-35% Shares | 155 |
Source: Investment Association
Ewan Lovett-Turner, director, investment companies research at Numis Securities said: "Donald Trump's plans for tax cuts and infrastructure spending are expected to boost US growth and corporate earnings. This was taken positively by equity markets, whereas concerns over rising rates and inflation hit bond markets."
However, the strong net inflows into Targeted Absolute Return funds and mixed asset funds indicate ongoing investor caution, he added.
Jason Hollands, managing director at Tilney Bestinvest, said: "This data clearly suggests that many retail investors have put the doom-laden predictions around the impact of Brexit behind them, as the sky has not fallen in, but above all this is a sign of the Trump effect, with Global and North American funds proving the two most popular equity sectors in today's data."
However, he warned against investors becoming too optimistic, saying US shares look expensive - especially as the pound remains weak. "Calling the top of a market is a mug's game but over the long term investors do have a habit of piling in when markets are near their peak points. Yet the art of successful investing is to buy low, sell high, not the other way round."
Investment platform The Share Centre, meanwhile, reports that its 10 most traded funds over 2016 include: CF Woodford Equity Income (GB00BLRZQB71), run by Neil Woodford, Fundsmith Equity (GB00B41YBW71), managed by Terry Smith, Legg Mason IF Japan Equity (GB00B8JYLC77), managed by Hideo Shiozumi, BlackRock Gold & General (GB00B99BDY18), managed by Evy Hambro, and Jupiter India (GB00BD08NQ14), managed by Avinash Vazirani.
Andy Parsons, head of investments at The Share Centre, said half of its 10 most traded funds in 2016 had global exposure, demonstrating an appetite for alternative regions.
Fundsmith Equity and CF Woodford Equity Income were also first and second among Fidelity Personal Investing's best-selling funds during 2016, followed by Fidelity MoneyBuilder Income (GB00B3Z9PT62), managed by Ian Spreadbury.
Tom Stevenson, investment director for personal investing at Fidelity International, said investors were focused on gaining geographical diversification and income-yielding investments. "With interest rates, particularly in the UK, parked at record lows, income-hungry investors have continued to turn to equity income and high-quality bonds for yield, " he explained. "This resulted in familiar names such as the Woodford Equity Income Fund."
Global and UK Equity Income sector trusts also dominated the list of most viewed investment trusts on the Association of Investment Companies' (AIC) website in 2016. Twelve out of the 20 most viewed had a dividend yield of 3 per cent or more, and 11 of these trusts had increased their dividends for 10 years or more.
Murray International Trust (MYI), managed by Bruce Stout, was the most viewed investment trust, followed by Scottish Mortgage Investment Trust (SMT), managed by James Anderson and Tom Slater, while the third most viewed was City of London Investment Trust (CTY), managed by Job Curtis.
