27th August 2015

Continued volatility see defensive assets dominate sales in July, FundsNetwork reveals

As volatility in the Chinese stock market dominated headlines in July, investors once again sought shelter within defensive assets, FundsNetwork’s sales data reveals.

With investor confidence continuing to be shaken in July, the UK Equity Income sector once again retained its top spot in the FundsNetwork sales charts. However its comparative popularity with other sectors was considerably down on the previous month, losing ground to the Property sector which saw a 22% increase in relative popularity (proportion of sales)*.

The defensive mind-set of advisers and their clients also resulted in demand for multi asset funds maintaining pace, with the Targeted Absolute Returns sector retaining third spot in the sales chart. While all three Mixed Investment sectors featured in the top ten list in July, it was the Mixed Investment 40-85% Shares sector that was the biggest winner seeing a 40% increase in net sales*. However, this was at the expense of the Mixed Investment 0-35% Shares sector which dropped to eighth place, showing that advisers are continuing to favour equities over fixed interest

The trends identified in the sector sales were closely reflected in the overall bestselling funds table as well within the ISA, with the Woodford Equity Income Fund and Standard Life Investments Global Absolute Returns Strategy maintaining their stranglehold on the top spots. However in the overall fund sales table, it was Premier Multi Asset Distribution and the Henderson UK Property Unit Trust which were the star performers in July, climbing up two and six places respectively – further underlining the strong demand for multi asset and property funds. 

In the FundsNetwork Pension, the trend towards low cost passive solutions continued its charge, with the share of net sales into passive investment growing in July and the Fidelity Index UK Fund taking the top spot. Like the previous month, the sector split remains less concentrated due to a lower propensity for tactical asset allocation of pension assets.

Danny Wynn, Head of Fund Partners for Fidelity Worldwide Investment comments: “In July, we saw the focus quickly shift from concerns over Greece to concerns over China. As a result and as evidenced by our sales data, investor sentiment naturally remained cautious, with advisers and their client’s continuing to allocate to more defensive assets such as property and multi asset solutions.

“Looking ahead to what we will find in the August numbers and beyond, and with the market outlook remaining uncertain, it’s likely we will see the Property sector continue to remain popular as well as equity and multi asset funds that are run on a more defensive basis. We may even see fixed income funds becoming more attractive with the prospects of an early rate rise receding.

“If volatility continues at the levels we have seen in recent days we may even see an increase in popularity of cash and money-market funds despite the low returns on offer”.

Top 10 adviser sales by fund via FundsNetwork

Top 10 adviser sales by sector via FundsNetwork

Pension bestsellers through FundsNetwork

ISA bestsellers through FundsNetwork

Source: FundsNetwork net sales data, July 2015.

* Based on weighted net sales

Investments