Net inflow and outflow figures for last month show that investors tend to favour funds with a proven track record in the current uncertain environment.
The top-five funds in the net sales chart for September were Jupiter Merlin Income, Invesco Perpetual Distribution, M&G Optimal Income, Standard Life Global Absolute Return Strategies (GARS) and M&G Global Dividend, all of which feature in the FER Select 100 – a quant-based list that identifies the best available funds in each asset class.
The GARS fund is the only one that is not headed up by an FE Alpha Manager, but it does not qualify for this accolade as it is run by a team instead of a single individual.
Top-5 funds for net sales in September
| Rank | Fund | IMA Sector |
| 1 | Jupiter Merlin Income Portfolio | Mixed 20-60% |
| 2 | Invesco Perpetual Distribution | Mixed 20-60% |
| 3 | M&G Optimal Income | Strategic Bond |
| 4 | Standard Life Global Absolute Return Strategy | Absolute Return |
| 5 | M&G Global Dividend | Global |
| 6 | Aberdeen World Equity | Global |
| 7 | Newton Global Higher Income | Global Equity Income |
| 8 | Newton Real Return | Absolute Return |
| 9 | Cazenove Multi Manager Diversity | Mixed 20-60% |
| 10 | Jupiter Strategic Bond | Strategic Bond |
Source: FE Analytics
All of the funds in the top-five have a focus on protecting against the downside, and have outperformed their sector average over the last three years.
M&G Global Dividend tops the list over three years in the total return stakes, while M&G Optimal Income tops the risk/return standings, boasting a Sharpe ratio of 1.24. Richard Woolnough, who heads up the latter fund, has returned 28.85 per cent over the period, with an annualised volatility score of just 7.5 per cent.
The results of the Cofunds research emphasise the point that defensive funds are in high demand from investors. Only three of the 10 best selling funds have a pure equity focus, and two of these have an income focus.
IMA Sterling Strategic Bond was the most popular sector overall, but the Specialist, UK All Companies, Europe ex UK, Property, and in particular UK Equity Income, all experienced major outflows.
M&G Optimal Income, Jupiter Strategic Bond and Fidelity Strategic Bond – all headed up by FE Alpha Managers – were the best-selling funds in the Strategic Bond sector.
Michelle Woodburn, head of fund group relations at Cofunds, believes the switch out of UK Equity Income shows investors are looking to diversify their holdings.
She commented: "As market volatility continued, it was interesting to see a significant outflow in the UK Equity Income sector. This indicates that advisers are increasingly seeking their income from funds with global exposure."
"In support of the trend, high net sales were seen in the Global Equity Income sector."
Among those in the top-10 best sellers list was FE Alpha Manager James Harries’ Newton Global Higher Income portfolio.