Risk-averse investors pile into income funds
While European and gilt products have seen their popularity plunge in recent months, funds that pay a regular dividend are in high demand.
Corporate Bond funds are back in vogue so far in 2012, according to sales data from Cofunds, reflecting investors’ demand for defensive income-paying products.
The IMA Corporate Bond sector has staged a significant come-back in 2012, accounting for 11 per cent of net sales year-to-date. This compares with 3 per cent and 8 per cent in the third and fourth quarters of 2011 respectively.
While a number of fund managers pointed to improved fundamentals in the first quarter of this year, in general UK investors have stayed grounded and maintained their exposure to more defensive names.
Income funds in both the equity and fixed interest areas have been particularly popular. Four of the five best-selling portfolios since 1 January sit in income-focused sectors.
Moreover, a number of those that made it into the top-20 list – including Invesco Perpetual Distribution and Thames River Distribution – have a yield in excess of 5 per cent.
Ten best-selling funds of 2012
Strategic Bonds also proved popular, accounting for 15.4 per cent of net sales in April. M&G Strategic Corporate Bond
, managed by Richard Woolnough, was the most dominant in the sector, securing a place in the list of 10 best-selling funds.
Elsewhere, the Mixed Investment sectors remained favourable with IMA Mixed Investment 20-60% Shares taking the top spot for the 10th consecutive quarter, accounting for 32 per cent of net sales in April. Once again, the Cazenove Multi Manager Diversity fund, managed by Marcus Brookes, was the best-selling fund.
Despite the popularity of the IMA Corporate Bond sector, only Woolnough’s M&G Corporate Bond portfolio made it into the top-20 list.
Newton Asian Income
and First State Global Emerging Market Leaders
were the only emerging market-focused portfolios to make it into the top-20, while Neil Woodford’s Invesco Perpetual Income
and Leigh Harrison’s Threadneedle UK Equity Income
funds were the only portfolios to feature from IMA UK Equity Income.
On the other end of the scale, it has been a particularly disappointing year for the IMA Gilt and Europe ex UK sectors, as well as the traditionally popular UK equity sectors.
Commenting on the figures, Michelle Woodburn, head of fund group relations at Cofunds, said: "This time last year the Corporate Bond sector was out of favour with advisers but it’s now beginning to recover. Meanwhile gilts have fallen dramatically out of favour with advisers so far this year, seeing net outflows of 0.35 per cent year-to-date."
"Not surprisingly, Europe (excluding UK) saw the biggest net outflows in April accounting for -4 per cent of net sales this month."
"UK Equity Income and UK All Companies also remain out of favour with outflows of 11 per cent and 8 per cent year-to-date," she finished.