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Woodford effect causes UK All Companies greatest ever outflow

UK All Companies Funds experienced their greatest ever outflow in September in part because of investors moving money into Neil Woodford's new fund.
October 29, 2014

UK All Companies Funds saw a net retail outflow of £852m during September, their largest outflow ever, reports the Investment Management Association (IMA). It is the fourth month this has been the worst selling sector. Overall net retail fund sales, meanwhile, were only £702m, the lowest since January 2013, and Laith Khalaf, senior analyst at Hargreaves Lansdown, attributes this to "a jittery month in the markets, partly as a result of the Scottish referendum."

"Following a strong first half of the year, retail sales of funds slowed in August and September, with retail investors declining to further increase their holdings of equity funds," said Daniel Godfrey, chief executive of the IMA. "However, there was wide variation in the experiences of different types of equity funds with UK and European funds seeing net outflows whilst Global and Asian equity funds did better."

The most popular sector, for the fourth month in a row, was UK Equity Income with net retail sales of £606m. This was nearly double the next best selling sector, Property, which had net retail sales of £315m.

"You can see this huge outflow (from UK All Companies funds) is largely a continuation of the Woodford effect, as investors switch across from his old Invesco Perpetual funds," says Mr Khalaf.

Earlier this year star manager Neil Woodford's former funds Invesco Perpetual Income (GB0033053827) and High Income (GB0033054015) moved from the UK Equity Income sector into the UK All Companies sector. At the same time money has been moving out of these and into Mr Woodford's new fund, CF Woodford Equity Income (GB00BLRZQ406). CF Woodford Equity Income (an IC Top 100 Fund) swelled in size over the month from £2.7bn to £3.1bn, despite the fund witnessing a 0.2 per cent fall in value, suggesting a £400m inflow, according to Mr Khalaf.

"Investors continue to vote with their feet and their cash, some of them no doubt waiting for the latest dividend before switching across," he adds.

 

Top five best-selling fund sectors for September 2014

IMA SectorNet retail sales (£)
UK Equity Income606
Property315
Mixed Investment 40-85% Shares217
Asia Pacific Excluding Japan165
Targeted Absolute Return148

Source: IMA