Retail investors exit UK equities

Retail investors exited UK equities in favour of global and regional funds in January.

Traditional top selling sectors UK All Companies and UK Equity Income suffered net outflows of £208m and £65m, IMA statistics show. However, the Global Growth sector led equity sales with a net inflow of £229m, followed by Specialist on £153m and Asia Pacific ex Japan with £132m.

Retail investors are continuing to rotate out of the £ Corporate Bond sector in favour of £ Strategic Bond. Corporate Bond saw the biggest outflows of any IMA sector in January at £228m, while Strategic Bond saw a £284m net inflow.

Meanwhile, Property starts the year as the top selling IMA sector, with net retail sales of £373m.

Overall, January 2010 saw net retail sales of £1.8bn, the highest ever for the month of January. Funds under management grew to £470.1bn, up from £357.1bn a year ago.

Equities started the year as the leading asset class, accounting for 30% of net retail sales (£549m). Bonds, which led sales during much of 2009, accounted for 17% of net retail sales (£317m) in January, behind Other (£375m) and Property (£373m). Absolute Return - UK comprised 59% of the ‘Other' asset class.

IMA chief executive Richard Saunders says: "We have seen a good start to the year with net retail sales of £1.8bn - the highest sales for any January. As in recent years, January sales have come in slightly below those of December.

"Equities proved more popular than bonds, in contrast to a year ago. Equity investors appear to be becoming more adventurous, preferring the Global, Asian and North American sectors to the UK and Europe.

"Property was the most popular IMA Sector in January, as it had been in the last quarter of 2009. By contrast, the least popular IMA Sector in January was Sterling Corporate Bond, which had topped the sales charts for the first eight months of last year."

Henderson head of retail fixed income John Pattullo says rotation out of the £ Corporate Bond sector is justified.

"It is encouraging to see that investors in single sector corporate bond funds are beginning to rethink their position and take a more strategic approach," he says.

"With the year ahead almost certain to present fixed income investors with some serious concerns - as markets begin to focus on the true cost of the Government's response to the financial crisis - it is encouraging to see that investors are looking towards funds with flexible mandates and the freedom to invest across all types of fixed income assets."