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In April 2024, UK domiciled funds experienced a surge in net retail sales, reaching £2.8 billion, the highest since August 2021. This increase, as reported by the Investment Association (IA), was significantly influenced by the ISA season, which encouraged savers to maximize their £20,000 personal allowance from the previous tax year or to capitalize on the new tax year’s allowance for their investments.
Key Highlights for April 2024:
- Overall Sales Boost: Net retail sales escalated to £2.8 billion in April from £504 million in March 2024.
- Dominant Sector: The Global sector led with £1.3 billion in net retail sales, the most robust performance since the £1.8 billion recorded in April 2021.
- Record Inflows into Tracker Funds: Tracker funds saw unprecedented inflows of £3.8 billion in April, surpassing the prior record of £3.0 billion in November 2020. Equity trackers were particularly popular, drawing £2.6 billion. Fixed income and mixed assets also enjoyed significant inflows, totaling £842 million and £287 million, respectively.
- Mixed Asset Funds Rebound: April marked the first positive inflow into mixed asset funds since March 2022, with a total of £376 million, predominantly in the Mixed Investment 40-85% Shares category.
- Shift in North American Equity: Inflows into North American equity dropped from £662 million in March to £278 million in April, as a strong rally in US equities waned due to robust US economic data tempering rate cut expectations.
- Steady Responsible Investments: Outflows in responsible investments remained stable at £12 million.
Trend Towards Diversification:
The consistent preference for global equity funds was evident with another £1.3 billion inflow in April, matching the high from April 2021. This trend reflects diminishing fears of recession triggered by ongoing interest rate hikes. Anticipation of potential rate cuts later in the year, which generally promote higher share values and economic growth, also played a role in bolstering equities. Global equity funds continue to attract investors seeking diversified exposure to various markets at a lower cost, underscored by the significant contributions from tracker funds.
Monthly Net Sales in the Global Sector (January 2019 – April 2024)
Miranda Seath, Director, Market Insight & Fund Sectors at the Investment Association, said:
“The positive inflows for April signal the green shoots of investors’ increasing confidence.The sharp rise in inflows can partly be attributed to the new tax year, with strong ISA sales during April as investors sought to maximise their personal allowances. Tracker fund sales reached a new record of £3.8 billion in April, a significant result after the toughest two years for fund flows the industry has ever seen. Cost conscious investors topped up their ISAs, favouring global equity trackers. This supports the results of the IA’s recent ISA survey, which revealed that despite the continued high cost-of-living, 38% of investors ended this tax year having invested more than in the previous tax year.
“As we head to the polls in the UK on July 4th, it remains to be seen how the UK election will impact investor attitudes, particularly the extent to which it will influence investor demand for UK equities, which have remained in outflow through Q1. The next elected government will have limited fiscal headroom and will be required to balance competing spending priorities, but despite these constraints, there will be an opportunity to restore stability to the UK economy as UK inflation continues to calm and we see tentative growth.”
“The outcome of the November elections in the US will arguably be the most significant for markets. Regardless of who wins, we could see increasingly protectionist policies linked to boosting American industries. The recent implementation of 100% tariffs on Chinese electric vehicles is a further sign of a shift from the globalised, integrated supply chains of the nineties and noughties. In April, global funds dominated overall inflows as UK investors looked for global diversification in. As elections results roll in around the globe, investors and markets will be watching the implications for the global economy.”
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