Funds of funds sales the highest ever - IMA data reveals

11 February 2010

The Investment Management Association (IMA) today publishes its quarterly figures for Funds of Funds, Ethical and Tracker funds for Quarter 4 and the full year 2009.

Key findings for 2009:

• Funds of Funds net retail sales the highest on record
• Tracker fund sales the highest for six years
• Sales of Ethical funds steady
• Richard Saunders, Chief Executive of the IMA, commented:

"Funds of Funds have continued to increase their market share, with net retail sales in 2009 being the highest ever and funds under management the highest year end total on record. We are also seeing an increasing proportion going to funds invested with other fund managers, and these now constitute the majority.

"Trackers, which mainly invest in UK indices, have had the best year for net retail sales since 2003.

"Ethical fund sales are just 1 per centup on 2008, but funds under management finished 2009 at the second highest year end ever."

FUNDS OF FUNDS

Funds of Funds net retail sales in 2009 were the highest ever recorded

Net retail sales of Funds of Funds totalled £3.9 billion in 2009 - nearly four times the 2008 level of £1 billion - and the highest ever recorded.

Funds of Funds sales accounted for £1 in every £10 invested in all funds (10 per centof gross retail sales) in 2009.

Funds under management for Funds of Funds totalled £42.7 billion - the highest year-end on record. This was 42 per centup on 2008, ahead of the overall level of growth for all funds under management (33 per cent). Funds of Funds represent 8.9 per centof all funds under management (£1 in £11) - more than double the proportion ten years ago (4.2 per cent) when the total for Funds of Funds under management stood at just £10.6 billion.

As well as growing in popularity, there is a trend for Funds of Funds to invest a greater proportion of their money in the funds run by other firms (external). In 2009 this was the case for more than half (56 per cent) of Fund of Funds under management, a proportion that has increased in the past ten years (21 per centin 1999). The total invested in external funds at the end of 2009 was £23.8 billion, more than ten times the level it was ten years ago (£2.2 billion).

TRACKER FUNDS

Tracker fund net retail sales - in 2009 the highest for six years

Net retail sales of Tracker Funds totalled £313 million in 2009, the highest since 2003

Tracker funds under management - the highest year end on record

Tracker funds under management totalled £27.7 billion at the end of 2009, 38 per centup on 2008 (£20.0 billion). This is slightly ahead of the 33 per centrise in total funds under management.

Of the 73 Tracker funds, 42 (58 per cent) track the main UK indices, mainly the FTSE All Share and the FTSE 100 indices. The remainder track a wide spread of other equity indices, including European, Global, Asia Pacific and the US.

ETHICAL FUNDS

Net retail sales of Ethical funds in 2009 were up 1 per centon 2008 but well down on 2007

Sales of Ethical funds rose 1 per centyear-on-year, with net retail sales of £155 million in 2009, just £1 million up on the year before.

Although net retail sales of Ethical Funds in 2009 are at a much lower level than in 2007, with outflows of £14 million in Quarter 2 2009, Quarter 4 sales were the highest since Quarter 4 2007.

Ethical funds - funds under management in 2009 were the second highest year end on record

Ethical funds under management increased 26 per centyear-on-year to £5.6 billion at the end of 2009 - and were the second highest year end on record after 2007. (However, this increase was less than the average for all funds under management, which was 33 per cent.)

The number of funds in the IMA Ethical category stood at 54 at the end of 2009, slightly down from the high for 56 in 2008, but offering considerably more choice to investors than the 15 available in 1992 when net retail sales totalled just £10 million.

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