Investors with a preference for the UK opted for the expertise of star manager Neil Woodford, whose Invesco Perpetual Income and High Income funds both made it into the top-10 list.
However, it was the non-UK market that captured the interest of UK investors, with two emerging market equity income funds – Newton Asian Income and Schroder Asian Income Maximiser – making it into the top-10 list, as well as JPM US Equity Income and Newton Global Higher Income.
Top-10 best selling funds in February 2012
| Fund |
Sector |
| L&G UK Index |
UK All Companies |
| Newton Asian Income |
Asia Pacific ex Japan |
| Aberdeen Emerging Markets |
Global Emerging Markets |
| Jupiter Global Managed |
Global |
| Invesco Perpetual Income |
UK Equity Income |
| Schroder Asian Income Maximiser |
Asia Pacific ex Japan |
| JPM US Equity Income |
North America |
| Newton Global Higher Income |
Global Equity Income |
| Neptune China |
China/Greater China |
| Invesco Perpetual High Income |
UK Equity Income |
Source: The Share Centre
With the exception of L&G UK Index, which is the default investment option for child trust fund vouchers invested via The Share Centre platform, all of the funds featured on the list are actively managed equity funds.
Andy Parsons, head of investment research at The Share Centre, says the preference for equity income funds reflects the cautious optimism of UK investors in the current climate.
"Markets continued to surprise many investors during February as positive upward movement was aided by a raft of continuing positive economic data from the US, alongside the much-awaited second round of the European Central Bank LTRO scheme," he explained.
"Whilst these measures will not resolve the deep rooted issues within the European region, they do bring respite and buy time for the political forces to continue negotiations and formulate plans for the longer-term future of the region."
"Investor appetite remains varied, though there appears to have been a greater tendency to seek opportunities outside of the UK. Income is clearly still a driver for a pool of investors, potentially to help supplement their lifestyles."
Graham Toone, manager of the Margetts St Johns Realistic Core fund, has advocated this move from the UK to globally focused portfolios.
"There’s an ongoing debate in the industry about the merits of an overweight position in our domestic market," he said. "A couple of years ago, we looked at the risks in the UK and thought the only logical step was to adopt a more global focus."
"A global focus gives the manager a greater pool of stocks to choose from, with some exposure to high growth markets which aren’t as affected by the western debt crisis."
The Newton Asian Income fund, which has more than doubled in size to £1.7bn in the last 12 months, was the most popular global equity income fund overall.
"Asia has predominantly been seen as [a region] that affords real growth opportunities, but we firmly believe that for income seekers looking to really diversify their portfolio, then funds such as this one offer real attraction and potential for reward," added Parsons.
Performance of fund since launch vs sector and benchmark
Source: FE Analytics
Newton Asian Income has returned 131.45 per cent since it was launched in November 2005, outperforming its sector average and benchmark by 35.56 and 25.53 per cent respectively, with less volatility. It is also a top-quartile performer over one, three and five years.
With a one-year historic yield of 4.89 per cent, it is also one of the highest yielding funds of its kind.
In anticipation of an imminent soft-closure, Aberdeen Emerging Markets has experienced vast inflows this ISA season, pushing it up to third place in the February sales list. Investors have only until the beginning of April to add the sector-leading fund to their portfolio.
Edward Johnson, head of operations at discount broker Willis Owen, says his firm has also seen a move towards income-focused strategies.
“So far this year we’ve witnessed significant demand for income funds in particular, which has contributed to a 15 per cent increase in sales at Willis Owen compared to this time last year," he explained.
"Clearly, more and more people are looking for alternatives to cash as we enter a fourth year of record low interest rates. In February and March, our top ten best sellers have been dominated by income funds."
“Our most popular income funds include the Fidelity MoneyBuilder Income Fund, which delivers a steady income stream through all types of market environments," he added.