‘Marked fall’ in investment into pure bond funds

Pure bond funds have fallen out of favour with UK investors over the last year, according to Alliance Trust Savings, which has listed its best selling funds funds for 2016.

There were none that appeared in the top 10 list, compared with the tax year end (1 March to 5 April 2016) when the Aviva Investors High Yield Bond fund, Fidelity Global High Yield fund and AXA Global High Income fund were all top sellers.

No pure bond funds appeared in the list for the full year.

Instead the Fundsmith Equity fund was the top seller, following by Vanguard LifeStrategy 60% Equity fund, one of five from the passives giant to feature in the top 10.

The Woodford Equity Income fund, which rounded out the top three, was the only active UK equity fund. The Vanguard FTSE UK All Share Index was the only other UK focussed fund in the list.

Sara Wilson, head of platform proposition, Alliance Trust Savings, says: “There has been a marked fall in investment into pure bond funds, although sales of mixed investment funds, which spread money across stocks and bonds, have held up well. 

“In the immediate aftermath of the Brexit vote, we saw increased trading on the platform. Investors mainly saw the decision to leave the European Union as a buying opportunity, reviewing their portfolios to ensure their investments are best placed to deal with ongoing market uncertainty.

“We’ve seen global funds increase in popularity as investors seek to diversify their holdings away from UK focussed holdings.”