Fund investors return to equities

Equity fund net retail sales reached £541m in September, well above the average over the past 12 months (an outflow of £65m). This is the first time any asset class has beaten fixed income in the past 12 months, since equity was the best seller in August 2011 with net retail sales of £552m. This was despite an equity market rally over the summer this year leading to concerns that investors were missing out (read more on this).

"Net retail sales were again above £1bn in September, reversing the unexpected outflows seen in August," said Jane Lowe, director of markets at the IMA. "Global funds took the lion's share of these net sales, against a notable outflow from UK equity growth funds. However substantial inflows were seen in both UK and Global equity income funds, and a focus on income was apparent in three out of the top five selling sectors."

Sterling Strategic Bond funds remained the second best selling sector, the only fixed-income sector in the top five. However, Jason Hollands managing director at Bestinvest says: "With government bonds now yielding less than inflation, and corporate bond yields having also tightened, we think equities deserve greater attention from investors. Equities represent better value than fixed income in our view and yields are also relatively more attractive. Importantly, the unprecedented levels of concerted action by central bankers around the globe to stimulate the financial system has reduced some of the near-term risks of investing in equities."

Absolute Return UK was the best-selling fund sector for September, reflecting investor caution. However, Mr Hollands thinks there are good opportunities for the brave: "In particular, while we are cautious on China, we believe emerging market equities look good value and, for those willing to go against the crowd, European equities are deeply discounted."

IMA sector sales in September 2012

Source: IMA