The fund house’s more restricted corporate and strategic corporate bond funds were among the year’s biggest shedders of cash, suggesting that investors may have been rotating from bonds into slightly riskier bonds and blue-chip equities.
Income remained the key theme that united the funds attracting the most money last year, while absolute return and growth funds also made an appearance.
Source: FE Analytics
FE Alpha Manager Richard Woolnough’s M&G Optimal Income is the largest of the manager’s extremely popular bond funds, having attained a size of £16.5bn.
The fund has a wide remit and is able to invest in all parts of the bond market and even equities, which it has been doing more so in recent months.
The fund has raised its weighting to equities from round 5 per cent in the middle of last year to 12 per cent at the end of November. It currently holds Microsoft stock in its top 10 and yields 3.11 per cent.
The £8.7bn M&G Global Dividend fund, run by FE Alpha Manager Stuart Rhodes, is a global equity fund yielding 2.99 per cent.
It has almost doubled in size this year to £8.1bn thanks to inflows and performance.
The next fund on the list is the Baillie Gifford Diversified Growth fund, which has taken in roughly £2bn despite “soft-closing” to new investors in March. The fund is still available without an initial charge through some fund supermarkets.
Managed by Patrick Edwardson and Mike Brooks, it is a multi-asset fund that targets growth, and invests in a number of specialist Baillie Gifford funds as well as in those of other providers and directly in some stocks.
The BlackRock UK Equity Tracker was almost as popular this year. The fund tracks the All Share and has only institutional share classes.
Scottish Widows HIFML UK Growth and Halifax UK Growth have also been among the most popular, despite poor performance records.
The Halifax fund sits in the bottom quartile over every time period and the Scottish Widows fund in the third.
The purchase of Cazenove by Schroder’s was a boon for FE Alpha Manager Julie Dean’s Cazenove UK Opportunities fund, which saw a fraction under £800m of new money this year, pushing the fund size to £2.6bn.
The fund has sailed on regardless, recording top quartile returns for the third successive year. Our data shows it has made 32.8 per cent in 2013 as the average IMA UK All Companies fund has made just 25.88 per cent.
Performance of fund versus sector and benchmark in 2013
Source: FE Analytics
The sell-off over the summer in bonds and equities left many investors scrambling to find safe places to put their cash, and Standard Life GARS and Newton Real Return were the two absolute return funds to benefit the most, both being in the top 10 for funds attracting new money.
With a rocky road predicted by many for bonds next year, it could well be that absolute return funds continue to see such popularity next year, despite the fact that few of them managed to protect in this year’s downturn, as we reported at the time.
Other notable funds outside the top 10 include the JPM US Equity Income fund which attracted more than £600m of inflows and Terry Smith’s Fundsmith Equity fund, which attracted almost £550m in the year in which it achieved a three-year track record, closing the year at £1.575bn.
The list of the biggest losers contains few surprises and is dominated by funds that lost their manager.
The Schroder UK Alpha Plus fund deserted by Richard Buxton tops the list, while Neil Woodford’s two Invesco Perpetual income funds also feature highly.
Source: FE Analytics
Buxton left Schroder’s for Old Mutual in March this year and many investors left the fund as a result. The manager’s Old Mutual UK Alpha fund has seen net inflows of £380m this year, our data shows.
FE Alpha Manager Woodford’s departure from Invesco – to be completed in April – was even more traumatic for the average investor as his funds are among the very largest in the UK market.
The Invesco Perpetual Income fund saw much the larger outflows, according to our numbers, although both have seen hefty redemptions.
While some M&G funds saw he inflows, others saw investors take their money elsewhere. Earlier in the year we highlighted the outflows from FE Alpha Manager Tom Dobell’s M&G Recovery fund, which has continued to shed money as performance has lagged.
The fund was 267th out of 271 in the IMA UK All Companies sector this year.
M&G Global Basics also suffered, seeing net outflows of £880m this year, while manager Graham French departed in the autumn.
Woolnough’s M&G Corporate Bond and M&G Strategic Corporate Bond funds saw strong outflows.