Fundsmith nets £1bn inflows as industry faces highest outflows

Brexit referendum european union EUThe industry has seen two consecutive quarters of net outflows for the first time in 30 years, with investors switching between funds, the Pridham report shows.

The latest Pridham report, for the second quarter of the year, shows that uncertainty ahead of Brexit hit flows, with the industry seeing a “significant amount of switching”.

Helen Pridham, editor of the report, says that while high outflows were seen, investors continued to put money into funds.

“This shows continued demand for funds but, when coupled with high redemptions, also indicates a significant amount of switching,” she says.

For example, JP Morgan saw increased demand for its US Equity Income and Global Macro Opportunities funds, but saw outflows elsewhere.

Fundsmith was one winner in the quarter, topping the list of managers by net retail sales, at £1.02bn, a 70 per cent rise in the first quarter.

“With concern growing about the UK economy, it benefitted from investors wishing to switch into more diversified global equity funds and its good performance record also helped to attract new clients,” says Pridham.

Legal & General Investment Management saw the second highest net retail sales, as a result of inflows to its index trackers.

The asset manager saw net sales of £399m for the quarter, a 50 per cent rise on the previous quarter. Sales into its index trackers, including the L&G Global Inflation Linked Bond Index fund, helped to counteract property outflows.

“Many managers were expecting a remain vote would lead to a more ‘risk on’ attitude in the second half but the leave vote has left advisers and investors feeling uncertain and cautious. Until Brexit becomes the new normal, investors may continue to hold back,” says Pridham.

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