Net sales into Property fell from 28.5% in Q3, where it was the top selling sector, to 21.3% in Q4, falling to position number 3. Despite this drop, Property fund flows continue to be well above their longer term average. Some of this drop could be as a result of portfolios now reaching the limits of what they can hold in property according to their asset allocation.
Fixed Interest funds continue to experience low levels of flows, although sales did rise slightly in Q4 they still only account for 4.5% of net sales. The shift during 2014 away from UK Fixed Interest towards property was the result of many factors, but in the main was evidence of investors hunting yield, given low rates on gilts and AAA corporates. Additionally this shift demonstrates the increasing awareness of investors of the unsustainability of the low yields currently offered by fixed interest investments.
Europe has experienced a significant fall in net sales, dropping from 9.1% in Q3 to just 1.7% in Q4. The fall in net sales in the European sector is largely a reflection of the continuing uncertainty around the Eurozone.
European equities have laboured under the pressure of slow growth and potential near term deflation. Economic sanctions with Russia have detracted from eastern trade and attempted economic stimulation by the European Central Bank have proved ineffectual.
Top selling funds:
The top 10 selling funds on the platform, based on net sales during Q4:
CF Woodford Equity Income
Henderson UK Property OEIC
Royal London Corporate Bond
Neptune UK Mid Cap
Old Mutual UK Alpha
Artemis High Income
M+G Feeder of Property Port
Old Mutual Monthly Income Bond
Old Mutual Artemis Income
Dean Bowden, head of investment solutions, Old Mutual Wealth, comments:
“Despite UK equity markets being extremely volatile and dipping significantly in October and December, flows in to UK equities have continued to be strong. However, diversification is clearly still important to investors given the flows into Property and Multi-asset funds, both of which aid in diversifying a portfolio and spreading risk.
“During 2015 we are likely to see demand for Property funds stabilise at slightly above their longer term average levels, as sentiment towards UK Fixed Interest funds continues to waiver and investors seek income.
“In terms of other global markets, expectations for 2015 vary markedly between regions. Performance in Europe during 2015 will largely depend on the action and success of the efforts from the central bank to stimulate economic activity. The US market is likely to continue to do well despite reasonably high historic valuations. The US continues to attract investor interest given its positive outlook for growth coupled with stable labour wage rises and falling energy costs. Far East & Emerging market economies dependant on imported raw materials and energy are expected to see an uplift in both economic activity and profitability in 2015. However a number of these regional markets have already seen equity values rise in late 2014 partially reflecting the improving near term outlook.”