Investors pour into bond funds as UK equity income sees outflows of £444m

UK investors have continued their flight to safety with fixed income the best-selling asset class in October, according to the Investment Association.

Fixed income saw £2bn in net retail sales in October, while the Sterling Strategic Bond sector was the best-selling sector with net retail sales of £1.6bn.

Outflows continued from the UK equity income sector, which was the worst-selling sector over the month with a net retail outflow of £272m. UK equity funds in general fared badly, with a net retail outflow of £444m.

However, overall monthly net retail sales exceeded £5bn in October and funds under management increased by £29bn.

Chris Cummings, chief executive of The Investment Association, says: “2017’s record-breaking run continued in October as monthly net retail sales were again in excess of £5bn. Industry funds under management also increased by almost £30bn through the month which means that, at the end of October our members were responsible for £1.194trn of UK investor savings and investments.”

Alastair Wainwright, fund market specialist of the Investment Association, adds: “For the fifth month in a row, fixed income was the best-selling asset class with net retail sales of more than £2bn. For the third month in a row, Sterling Strategic Bond was the most popular sector with retail investors as they allocated £1.6bn in October. Notably, the Sterling Strategic Bond has featured in the five best-selling sectors each month since December 2016.”

Last month saw 2017 become the best-selling year since the Investment Association began keeping records, with net retail sales to the end of September totalling £33.7bn.