IMA: Bond funds suffer record redemptions in June

Robert Sinclair

Fixed income funds suffered £624m in net redemptions during June, according to the latest figures from the Investment Management Association.

The three worst selling IMA sectors for the month were £ Corporate Bond, Global Bonds and £ Strategic Bond.

IMA director of public policy Jonathan Lipkin believes fixed income has suffered due to uncertainty regarding central bank policy.

He says: “The highest ever net redemptions of fixed income funds by retail investors may have been a response to anxieties about future tapering by the Fed and other central banks.” 

The bestselling sector was IMA Mixed Investment 20-60% Shares with a net £271m in retail sales, followed by UK Equity Income and Targeted Absolute Return.

Equity remained the best selling asset class with £884m of net retail sales in June. In contrast to recent trends, investors showed a preference for UK equity funds in June, which saw the highest net retail sales since October 2006 at £479m.

European equity funds did not fare as well and endured an outflow of £66m in net retail sales for the month.

Recent figures from Morningstar showed investors pulled aroud €30bn from European-domiciled bond funds in June, which is described as an “exodus” from the asset class.

Bestinvest managing director for business development and communications Jason Hollands says: ”The news from the IMA that fixed income funds have seen record redemptions does not surprise us. We have been warning for some months over the growing risks in fixed income and the absence of fundamental value across much of the market.

”In the current environment we favour strategic bond funds for fixed income exposure, though the focus of these will be overall return rather than income yields.”