funds under management drop from £236bn to £195bn as investors remain cautious
Net Isa sales over 2002 fell by 28% from 2001, as IMA figures show a fall from £6.7bn to £4.8bn, with UK corporate bond funds the most successful at pulling in assets.
Funds under management ended the year 17% down from the start of the year, dropping from £236bn to £195bn.
Having grown steadily over the 1990s, assets under management have fallen off since 2000, although they have not reversed too much of the growth seen over that decade as assets remain above 1998 figures.
For the second year running bond and equity income portfolios have been the most popular vehicles for cautious investors, after 2000 saw massive inflows into technology and growth funds.
Bond funds increased their share of gross retail fund sales to 24% from 19% in 2001 and 12% in 2000. Equity funds saw their share shrink further to 66% from 71% in 2001 and 79% in 2000. Managed funds accounted for 6% and cash funds 2%.
Corporate bonds and income funds are also expected to make up the majority of this year's Isa season, although many expect sales to be down even further from those over the past two years.
The IMA's yearly statistics show the UK Corporate Bond sector was the top selling retail fund sector in net terms, with more than £2.6bn invested over the year. UK Equity Income and UK All Companies funds attracted £1.4bn and £1.2bn respectively. The UK Other Bond sector through 2002 saw sales of £867m, with Balanced Managed funds at £463m.
As reported last month in Investment Week, many product providers are planning to promote their corporate bond and equity income portfolios for this year's Isa season.
Those offering special discounts on lower-risk portfolios include Credit Suisse, Invesco Perpetual, Framlington, Isis, New Star, Jupiter, Swip and Investec.
IMA figures show that, in the last quarter of 2002, the worst selling retail funds were Europe ex-UK and North America.
Clare Arber, head of communications at the IMA, said: 'In the circumstances of last year, it is not surprising to have seen a further fall in net investment by retail savers. Unlike many other countries in Europe and North America, however, UK savers are continuing to invest, albeit at reduced levels. It is also notable that they are showing a strong preference for bond funds. While none of us knows when the markets will turn, the lack of panic selling by retail investors continues to be encouraging.'
Gross retail fund sales of £28.3bn over the past year were only marginally down on last year's £28.7bn. However, gross Isa sales of £6.5bn were 19% below 2001's figures of £8bn. Slightly less than three-quarters of all retail sales were made outside the Pep or Isa wrappers.
According to figures reported to the IMA, the growing popularity of fund supermarkets, even amid slowing Isa sales, saw the platforms contribute just over 20% of Isa sales, amounting to £1bn net.
According to the IMA's figures, the popularity of regular savings plans has diminished considerably, with investments falling off for the seventh successive quarter. Contributions over the last quarter of 2002 slowed to £486m, with the number of plans falling by 4,620.
The switch from unit trust structures to Oeics, however, continued over the past year. In 2001, there were 58 providers with 629 sub-funds, a figure that has now risen to 71 firms with 931 sub-funds. Oeic structures now represent more than half of all funds under management, compared with just 35% in 2001.
The past year saw very similar retail distribution patterns to previous years, with a slight shift from the direct channel to intermediaries. Advisers accounted for 66% of retail sales in 2002, up from 64% in 2001 and 61% in 2000, while direct sales forces saw their figures drop off from 14% in 2000 and 2001 to 11% in 2002.
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