Passive funds see record inflows from UK investors
UK Equity Income was the top selling sector in July the IMA announced today. More than half of all net retail sales in July were accounted for by the UK Equity Income sector, posting £1bn of £1.9bn total sales.
Tracker funds were also flying high, posting record net sales of £532bn.
Laith Khalaf, senior analyst, Hargreaves Lansdown, said: “Last month we saw the Woodford effect propel UK Equity Income to the top of the sales charts. We suspect this month we are seeing a ripple of that effect, as coupon-clipping investors in the Invesco Perpetual High Income fund stayed for the ex-dividend date on 1 July, then switched across to Woodfords’ new fund. Indeed it is notable that the worst selling sector in July was UK All Companies, the sector in which the Invesco Perpetual High Income fund now sits.
“Passive funds have also seen record inflows as investors focus on costs and performance. We have noticed this too with investor interest in our new core tracker range of preferred passive funds. We expect the UK market to gradually polarise into low cost passive funds on one hand, and active managers with a proven track record on the other. The middle ground hitherto inhabited by the closet tracker is being eroded, as investors become more savvy and demand outperformance from their active managers.”
