IA Stats For May – Confidence In UK Funds Dwindles While Interest In Europe Returns

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IA Stats For May – Confidence In UK Funds Dwindles While Interest In Europe Returns
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Optimism for the continent has returned for British Investors, who took £571 million out of UK funds and added £101 million back into European funds in May. This is according to the latest set of Investment Association (IA) data, released today which tells us where investors were putting their money in May 2021. You can find them here.

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  • Europe funds experienced inflows of £101 million, after four months of outflows, following a period of strong performance from European stocks.
  • However, UK funds was the only equity fund region that experienced outflows, which totalled -£571 million
  • Investors placed £3.5 billion into funds in May, with £2 billion allocated to actively managed funds and £1.5 billion allocated to index trackers.

UK Funds See Outflows While European Funds See Inflows

Kate Marshall, Acting Head of Investment Analysis at HL, said:

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“Optimism towards European markets has returned for UK investors, who added £101 million into European funds in May after four months of outflows. follows a recent period of strong performance from European stocks, aided by the fact some European countries are getting a better hold of the coronavirus outbreak and are finally making some headway in rolling out vaccines after initially lagging other developed nations.

UK funds saw a reversal in fortunes. Previously one of the most popular areas for investors, this month it was the only equity fund region that experienced outflows. UK Equity Income was the least popular sector in May and has continued to face challenges after a difficult year for many dividend-paying companies hit by coronavirus restrictions.

Elsewhere, after months of sitting at the top of the best-selling sector table, Global funds were pipped to the post by the IA Mixed Investment 40-85% Shares sector. This reminds us that some investors are still looking for an element of resilience to their investments, despite strong market returns over the past year. Funds in this sector invest partly in bonds and cash, so they’re not always fully exposed to the volatility that often comes with pure stock market investing.”

In Favour

  • Mixed Asset funds were the best-selling asset class in May 2021 with £1.2 billion in net retail sales.
  • Equity was the second best-selling asset class, with £1 billion of inflows.
  • Fixed Income funds experienced £986 million of inflows.
  • Other funds (which includes the Targeted Absolute Return, Volatility Managed, and Unclassified sectors) experienced £388 million of net retail sales.
  • Money Market funds experienced net retail inflows in May of £25 million.
  • Global was the best-selling equity fund region in May 2021, with net retail sales of £736 million.
  • North America funds were second, seeing net retail inflows of £206 million.
  • Asia funds experienced net retail inflows of £59 million.

The five best-selling Investment Association sectors for May 2021 were:

  1. Mixed Investment 40-85% Shares was first with net retail sales of £692 million.
  2. Global was second with net retail sales of £445 million.
  3. Volatility Managed followed with net retail sales of £394 million.
  4. Global Emerging Markets was fourth with net retail sales of £378 million.
  5. £ Corporate Bond was fifth with net retail sales of £310 million.

Out Of Favour

  • Property funds however experienced £184 million in net retail outflows.
  • UK funds was the only equity fund region that experienced outflows, which totalled -£571 million.

In May and June 2021, Hargreaves Lansdown clients were buying in to the following IA sectors.

Top IA sectors at HL in May (net) Top IA sectors at HL in June (net)
Global
Global
UK All Companies AIM Listing
Overseas North America
UK Smaller Companies Life Insurance
AIM Listing Oversea
Travel and Leisure Banks
Mixed Investment 40-85% Shares Mixed Investment 40-85% Shares
Mobile Telecommunications Europe Excluding UK
Software/Computer Svs Travel and Leisure
Global Equity Income UK All Companies

In May 2021 HL clients were buying the following shares, overseas shares, funds and trackers. Please note this is net buys (so buys less sells) and in alphabetical order.

Top traded UK and overseas shares in May (net) alphabetical order Top traded funds and trackers in May (net) alphabetical order
AMC Entertainment Holdings Inc Chelverton UK Equity Growth
Cineworld Group plc Fundsmith Equity
Coinbase Global Inc HSBC FTSE 250 Index
Darktrace plc Legal & General International Index Trust
Gamestop Corporation Legal & General UK 100 Index Trust
International Consolidated Airlines Group SA Legal & General US Index
ITM Power plc Marlborough Nano-Cap Growth
National Grid Marlborough UK Micro-Cap Growth
Tesla Inc Rathbone Global Opportunities
Vodafone Group plc Vanguard LifeStrategy 100% Equity

In June 2021 HL clients were buying the following shares, overseas shares, funds and trackers. Please note this is net buys (so buys less sells) and in alphabetical order.

Top traded UK and overseas shares in May (net) alphabetical order Top traded funds and trackers in May (net) alphabetical order
Lloyds Banking Group plc Baillie Gifford American
Legal & General Group plc Fundsmith Equity
Phoenix Group Holdings Plc Rathbone Global Opportunities
Barclays plc Marlborough European Multi-Cap
Fresnillo Legal & General US Index
Gamestop Corporation Legal & General International Index Trust
International Consolidated Airlines Group SA Marlborough UK Micro-Cap Growth
Vodafone Group plc Fidelity Index World
easyJet plc HSBC FTSE 250 Index
Aviva plc Baillie Gifford Managed

About Hargreaves Lansdown

Over 1.6 million clients trust us with £132.9 billion (as at 30 April 2021), making us the UK’s largest digital wealth management service. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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