UK savers invest £4 billion into retail funds during April

As savings rates began to fall in April, UK savers returned to the investment market, putting £4bn into retail funds during the month after record outflows during March.

Figures released by the Investment Association (IA) reveal that active funds saw strong net retail sales of £2.7 billion during April, reaching nearly double the net retail sales of tracker funds, which saw £1.4 billion in net retail inflows. Meanwhile, equity funds, as well as nearly all asset classes, returned to inflows in April, with 2.4 billion in net retail sales. ISA funds experienced £1.1 billion in net retail sales during the month, which, according to the IA, could be due to the new tax year encouraging savers to make the most of the tax wrapper. Furthermore, responsible investment funds continue to grow in popularity with investors, as they saw record net retail sales of £969 million in April.

Commenting on these figures, Chris Cummings, chief executive of the IA, said: “After record outflows from the fund market as global lockdown measures began in March, savers returned to put £4 billion into retail funds in April. Part of this comeback was fuelled by record inflows into responsible investment funds in April. The crisis has brought a new momentum to the subject of responsible investing, with asset owners and retail investors asking more about their investment manager’s environmental, social and governance approaches.

“Both active and passive funds benefited from the return to inflows in April. Bond funds gathered £903 million in assets, suggesting some of March’s record redemptions flowed back quickly as we moved past the initial market turbulence of the COVID-19 pandemic.”

During April, the five best-selling IA sectors were:

• Global, which had net retail sales of £1.2 billion
• UK All Companies, which saw net retail sales of £874 million
• £ Corporate Bond, with net retail sales of £535 million
• Mixed Investment 40-85% Shares, which had net retail sales of £530 million
• £ High Yield, which saw net retail sales of £312 million.

The worst-selling IA sector in April was Targeted Absolute Return, which saw an outflow of £491 million.