Retail funds stage £4bn comeback during April

UK savers put £4bn into retail funds in April after record outflows in March, according to new figures published by the Investment Association (IA).

The latest data also revealed that active funds saw strong net retail sales of £2.7bn in April, reaching almost double the net retail sales of tracker funds, which saw £1.4bn in net retail inflows.

Equity funds, alongside nearly all asset classes, returned to inflows in April with £2.4bn in net retail sales, while ISA funds experienced £1.1bn in net retail sales in April. IA suggested the new tax year encouraged savers to make the most of the tax wrapper.

Responsible Investment funds, meanwhile, saw record net retail sales of £969m in April.

IA chief executive, Chris Cummings, said: “After record outflows from the fund market as global lockdown measures began in March, savers returned to put £4bn into retail funds in April. Part of this comeback was fuelled by record inflows into responsible investment funds in April.

“The crisis has brought a new momentum to the subject of responsible investing, with asset owners and retail investors asking more about their investment manager’s environmental, social and governance approaches. 

“Both active and passive funds benefited from the return to inflows in April. Bond funds gathered £903m in assets, suggesting some of March’s record redemptions flowed back quickly as we moved past the initial market turbulence of the COVID-19 pandemic.“

Commenting on IA’s Latest investment figures, AJ Bell personal finance analyst, Laura Suter, added: “Investors stormed back into markets in April, with renewed optimism that stock markets globally would rebound and that the falls seen in February and March were behind them.

“There’s a lot of focus on how companies are reacting to the coronavirus crisis in terms of how they are treating their staff, whether they are using the Government support schemes and how they’re supporting wider society. Investors are likely to pay close attention to these aspects as the companies that responded well are likely to have gained a lot of goodwill that will stand them in good stead as we move into the recovery phase of the pandemic.

“Unsurprisingly, UK direct property funds saw little movement in flows in the month, as the majority of the sector remains suspended to withdrawals and inflows while the property market has ground to a halt during the crisis.

Once some of these funds start to reopen, we’d expect to see an increase in outflows as investors who have been burnt by the closures and have worries about the future of the UK property market decide to redeem their investments and shift it elsewhere.”

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