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Equity income, property and absolute return: Where the fund money went in October

27 November 2014

Investors have continued to pour money into equities and property over the past month, but which funds have won and lost when it comes to cashflow?

By Gary Jackson,

News Editor, FE Trustnet

Equities remained the most popular asset class with UK retail investors in October, according to the Investment Management Association (IMA), but while money has returned to UK All Companies funds it poured out of smaller companies portfolios.

IMA figures shows that net retail fund sales reached £2bn in October, up from £728m in the previous month.

Equities returned as the best-selling asset class with net retail sales of £981m, after being knocked into second place by property in September.

Daniel Godfrey, chief executive of the IMA, said: “Following a couple of months of lower sales in August and September, fund flows in October were more in line with what we have seen overall this year.”

“In October, equity was once again the best-selling asset class by far, with UK equity funds attracting the most retail sales and UK Equity Income continuing to be the best-selling IMA sector for the fifth consecutive month.”

As noted, UK Equity Income held onto its position as the most popular IMA sector, capturing £729m in new money.

It has been the industry’s best selling sector for five months running now, with some dubbing this the ‘Woodford effect’ as it came about after star manager Neil Woodford opened his own investment house.

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Source: IMA



The CF Woodford Equity Income fund launched in June 2014 and gathered assets of £3.3bn by the end of October after consistently being the IMA UK Equity Income sector’s most popular product. FE Analytics shows the fund attracted around £315m of net inflows in October.

Of course, Woodford was not the only UK equity income manager to experience net inflows.

Our data shows Adrian Frost and Adrian Gosden’s Artemis Income fund was the second best-selling last month, followed by Lee Gardhouse and Ellen Powley's HL Multi Manager Income & Growth, Francis Brooke’s Trojan Income and Leigh Harrison and Richard Colwell’s Threadneedle UK Equity Income funds.

Woodford, Frost, Brooke and Harrison are all FE Alpha Managers, while Trojan Income and Threadneedle UK Equity Income appear on the FE Research team’s Select 100 list of preferred funds.

The other major UK equity sector – IMA UK All Companies – witnessed a turnaround in October after racking up its first month of net inflows since April this year.

The peer group took £168m in new money, following losses of £852m and £358m in the previous two months.

The Majedie UK Equity fund, managed by Adam Parker, Chris Field, James de Uphaugh, Matthew Smith and Richard Staveley, took the most money in the sector, with inflows of £123.6m.

Richard Buxton’s Old Mutual UK Alpha fund, the Royal London FTSE 350 Tracker and FE Alpha Manager Nigel Thomas’ AXA Framlington UK Select Opportunities fund took the next three spots.

However, the sector has some high profile names being hit by outflows.

Matt Hudson’s Schroder UK Opportunities, which has had to deal with stuttering performance and a manager change, Tom Dobell’s M&G Recovery and Mark Barnett’s Invesco Perpetual High Income were among those at the top of outflows table in October.

Smaller companies, however, fared less well. Investors pulled a net £61m out of the IMA UK Smaller Companies sector, while £288m was yanked from European Smaller Company funds, making it the least popular peer group of the month. North American Smaller Companies shed £19m.

A note from Numis said: “UK Smaller Companies remained out of favour, experiencing net outflows for the sixth consecutive month, bringing the total net outflow over this period to £528m.”

“Sentiment towards European Smaller Company funds was even worse … bringing the total net outflow since May to £697m. Outflows from North American Smaller Company funds were modest in comparison, but this was during a month when there was renewed interest in large cap North American funds.”

Out of the European funds, Threadneedle Pan European Smaller Companies, Threadneedle European Smaller Companies and Baring Europe Select saw the highest outflows, according to our data.

From the IMA UK Smaller Companies sector, the worst hit were Schroder UK Dynamic Smaller Companies, Old Mutual UK Smaller Companies and Investec UK Smaller Companies, while Threadneedle American Smaller Companies saw the highest outflows from the North American peer group.

Returning to the sectors seeing net inflows, the funds topping the sales charts of the second most popular – IMA Property – were Henderson UK Property, M&G Property Portfolio and Royal London Property, FE Analytics shows.

Property funds have returned to popularity over recent years as investors increasingly sought returns uncorrelated to the gains being made in the stock and bond markets, while keep up their search for income yielding assets.


The three most popular in the IMA Targeted Absolute Return sector were Newton Real Return, CF Odey Absolute Return and Newton Global Dynamic Bond. Given growing concerns over the valuations in some areas of the market and expectations that volatility will start to pick, investors have been allocating more to absolute return strategies over recent months.

Schroder MM Diversity Income topped the IMA Mixed Investment 20%-60% Shares sector, followed by BlackRock Dynamic Diversified Growth and CF 7IM AAP Balanced.

In the IMA Mixed Investment 40-85% Shares peer group, Schroder MM Diversity Balanced, Investec Diversified Growth and BlackRock NURS II Consensus 85 proved the most in demand last month.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.