Surprise at scale of fall in British fund sales

Net retail sales of British-domiciled funds fell sharply in November, according to statistics from the Investment Management Association (IMA). Gross retail inflows of almost £6 billion were more than offset by repurchases of £6.3 billion, causing an overall net retail outflow of £333m.

The outflow is indicative of continued caution on the markets, but the scale of the redemptions has surprised many. IMA data shows that the last time retail redemptions exceeded sales was in July 1992, when there was an outflow of just £97m.

Indeed, before November, retail sales had remained relatively strong in 2007, despite the impact of the credit crunch on global markets.

Net retail inflows were £888m and £876m in September and October respectively.

Property funds in the Specialist sector were hit hardest, as investors continued to move out of the asset class. October’s outflow of £48m grew significantly, with retail investors withdrawing £253m from the funds in November.

Institutional redemptions raised the total net outflow to £494m, or 3.6% of total property funds under management. Several firms have taken steps to protect their property funds from large outflows in recent months, either by pricing them on a bid basis or by restricting redemptions.

Balanced funds were the biggest winners in terms of retail money, receiving an inflow of £169m.

This was down on October’s figure of £209m, but enough to make Cautious Managed the most popular net retail sector.

Despite the outflows from property, Europe excluding UK was the least popular retail sector, with redemptions hitting £195m.