UK saw highest sales of Funds of Funds on record in quarter two, latest data shows

The first half of 2011 has seen the highest sales of Funds of Funds on record at £3.8 billion, according to the latest figures from the Investment Management Association.

Ethical funds have also done well with net retail sales of £94 million, the highest quarter since the end of 2007 and a 23% increase compared with a year ago, while tracker funds also reported strong sales.

‘Investors have continued to show appetite for Funds of Funds and the first half of 2011 saw the highest net retail sales of Funds of Funds on record. In gross retail sales terms, £1 in every £8 invested in funds was invested in Funds of Funds in quarter two,’ said Richard Saunders, Chief Executive at the IMA.
 
‘Tracker funds also reported strong sales and have seen their market share approach 7% of total funds under management for the second quarter running. Sales of ethical funds in quarter two 2011 were the highest since late 2007, though they still represent a modest proportion of total sales,’ he added.

It is a sign that ethical funds are finding more favour as investors recoil against riskier and less transparent opportunities. ‘These IMA net sales figures are a positive signal that interest in green and ethical options continues to grow. It's encouraging to see the highest quarterly sales of ethical funds since before the 2008 financial crisis,’ said Lisa Wootton, UKSIF project manager of National Ethical Investment Week.

‘We hope that product providers, financial advisers and other organisations will use National Ethical Investment Week, taking place from 16 to 22 October this year, as an opportunity to tap into this increased demand and engage with investors about their green and ethical choices,’ she added.

The full figures reveal that net retail sales for Funds of Funds totalled £2 billion, above the quarterly average of £1.8 billion for the previous four quarters. Net retail sales of Funds of Funds totalled £3.8 billion for the first six months of 2011, the highest first half on record. Funds under management for Funds of Funds totalled £63.5 billion at the end of the second quarter, accounting for 11% of total funds under management.

In the second quarter over half of Funds of Funds money was invested in funds run by other firms: 59% of gross sales and 52% of funds under management. The total invested in external Funds of Funds at the end of June 2011 was £32.9 billion, up 39% on the same time a year ago.

Net retail sales of  Tracker Funds totalled £313 million, below the quarterly average of £515 million for the past four quarters. Tracker funds under management were £40.5 billion at the end of June 2011, accounting for 6.7% of total funds under management, in line with the first three months of the year.
 
Of the 80 Tracker funds, 43, some 54%, track the main UK indices, mainly the FTSE 100 index. The remainder track a wide spread of other equity indices, including European, Global, Asia Pacific and the US.