UK investors put £632m into fixed income funds in May
Fixed income funds saw inflows of £356m into funds during May, while institutional clients pulled 2.76bn.
Government Bond was the IA sector topping the sales tables, with 382m), UK Gilts (£344m), Volatility Managed (173m).
The worst-selling IA sector was UK All Companies, which experienced outflows of 916m in May. Global funds were the top-selling equity region, with net retail inflows of 261m.
Overall, equity funds saw outflows of 992m. Global funds saw net retail inflows of
IA chief executive Chris Cummings said ‘Caution was the theme of the month, with government bonds seeing strong inflows. This is not surprising given concern about potential global recession and ongoing conflict in Ukraine. Investors continued to diversify their equity portfolios, with continued inflows into global equity funds. However, North America saw its first outflow in seven months, possibly reflecting uncertainty ahead of resolution on the debt ceiling. The UK remains unloved amidst persistent outflows.’
Tracker funds saw net retail inflows of 96bn.
Laith Khalaf, head of investment analysis at AJ Bell, said that, given the much higher yields on offer from fixed income, it is ‘hardly surprising’ to see investors moving in the direction of government bonds. However, he noted that not all fixed income sectors had such a great month, with the Corporate Bond Sector and the Sterling Strategic Bond sector seeing outflows. ‘This suggests a premium is being put on safer government bonds, which makes sense when you can harvest healthy returns without taking on significant credit risk,’ he said.