Confidence back? UK investors are pouring £2.8bn into funds in the largest monthly allocation since August 2021
- Tracker funds had a strong month in April, with inflows of £1.6 billion
- UK funds saw outflows of £1.3bn during the period, findings show
Britons plunged back into investment funds last month, but caution remains amid market jitters and economic uncertainty.
UK investors put £2.8bn into funds in April, up £1bn on the previous month and the biggest inflow since August 2021, according to new data from the Investment Association.
However, a breakdown of investment signals points to continued caution, with bond and money market funds totaling £1.1bn and outpacing equities by just £93m.
Investing: British investors put £2.8bn into funds in April, according to the Investment Association
Tracker funds had another strong month in April, the Investment Association said, after taking £1.6bn of the overall total.
Equity funds saw inflows for the second consecutive month this year, with an investment of £93 million in April.
Fixed income funds saw £1.1bn inflows, while real estate funds made £19m.
The Investment Association’s worst-selling sector in April was UK All Companies, which saw outflows of £1.1bn, while UK funds saw outflows of £1.3bn over the period.
Chris Cummings, CEO of the Investment Association, said: ‘Consumer confidence rose by £2.8bn invested in funds in April, the highest level since August 2021.
“This month we have seen investors take a cautious approach, favoring bond funds, which saw £0.1.1bn inflows, and opting for globally diversified equity funds. UK government bonds also benefited, investing £259m in April,
Demand for ISAs was up in April, with £342m invested in the duty-free pack, five times more than the previous month. However, this was less than the same time last year, with an investment of £646 million in April 2022.”
According to the Investment Association, the top five selling sectors for April were:
1. Short-term money market with net retail sales of £770 million
2. Worldwide with net retail sales of £340 million
3. UK Gilts followed with net retail sales of £259 million
4. Specialist Bond with net retail sales of £226 million
5. Mixed investments 40-85 percent. shares with net retail sales of £225 million
Emma Wall, head of investment analysis and research at Hargreaves Lansdown, said: ‘The asset management industry can breathe a sigh of relief – investors are buying funds again, after a terrible 2022 that saw record outflows across all sectors.
But as investors buy back, it’s worth noting what they’re trading.
It is clear that while confidence in investing has returned, confidence in equity markets remained weak in April.
‘Concerns about inflation are partly to blame for this, as are the less rosy economic forecasts. Continued warnings of a recession in the developed world led many investors to choose lower-risk assets. But since April there are some green shoots.
“Today’s news of a US debt ceiling resolution will… provide a welcome boost to markets, although it is clear that caution remains necessary as long as prices are high and recession fears loom.”
Until May 26, Hargreaves Lansdown said the most popular tracker funds, in no particular order, were Fidelity Index World, Vanguard FTSE 100 index and Legal & General US Index.
Shifts: Fund flows compared by the Investment Association