Investors plough record amount into tracker funds in 2019
Total retail inflows double the 2018 figure
Flows into tracker funds hit a record £18bn in 2019, double their total in the previous 12 months, as retail investors continued to fall out of love with active management.
Investment Association (IA) figures show the popularity of index funds surged in April, with inflows during that month reaching £1.7bn, more than twice that of March's total. In both May and November, inflows breached the £2bn mark.
Of the total flows into passives, half, or £8.9bn, went into equity trackers, as stockmarkets pushed higher through the year. As a result of these flows, funds under management for tracker offerings hit £230bn at the end of the year.
Record £2.2bn pulled from UK property funds in 2019
Meanwhile, there was also surge of interest in responsible investment funds throughout the year, with 2019 being the first year the IA has tracked flows in and out of these mandates.
In Q4, responsible investment funds saw inflows of 1.3bn, a sevenfold increase from Q1's £190m. In total, investors ploughed more than £3bn into responsible funds in 2019.
Chris Cummings, CEO of the IA, said: "As global stock markets climbed, many savers swung heavily behind tracker funds in 2019.
"We also saw investors ramping up the hunt for funds that consider the impact of their investment strategy on the wider world, as they ploughed £1.3bn into responsible investment funds in the final quarter of the year alone."
On an individual fund sector level, UK equity mandates saw a big post-election bounce, with flows into the UK All Companies, UK Equity Income and UK Smaller Companies sectors hitting £1.3bn in December. UK All Companies was the best-selling sector for that month.
Meanwhile, UK Direct Property was the second-worst selling sector in December as retail investors sold £263m, taking the sector's 2019 total inflows down to £1.9bn.
ESG Blog: Retail buyers ramp up responsible investment in Q4
Overall, retail savers poured £3.6bn into funds in December, more than double the figure for November and the biggest mothly inflows since January 2018. For the whole of the year, retail inflows amounted to a net £15bn of inflows, around double the £7.7bn figure from 2018.
Cummings said: "Funds markets were buoyed in December by the 'Boris bounce' with £3.6bn invested into funds. Galvanised by the general election result, savers poured £1.3bn into UK equity funds, reaching inflows last seen in 2013. This new-found confidence was felt across UK plc, with inflows into funds investing in large to small-cap UK companies."
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