Funds of funds attract cash

INVESTORS have poured into funds of funds during 2011, new figures show, with the first half of the year seeing the highest sales on record.

Net retail sales of funds of funds for the first six months of 2011 hit £3.8bn, according to research by the Investment Management Association (IMA), and the £2bn of sales in the most recent quarter was well above the quarterly average of £1.8bn over the previous year.

Fund of fund sales in the second quarter accounted for £1 of every £8 invested in funds, with balanced funds the most attractive proposition for investors – making up 57 per cent of total funds under management in the sector.

In contrast, interest in tracker funds fell over the same period, with net sales of £313m falling well below the quarterly average of £515m.

Tracker funds under management totalled £40.5bn at the end of June, accounting for 6.7 per cent of total funds under management.

Ethical funds – so called because the investment decisions are rooted in social, environmental or similar concerns – saw their highest sales since 2007 with net retail sales reaching £94m.

Ethical funds under management totalled £7.1bn at the end of June 2011, up 23 per cent on the second quarter of 2010.

“Investors have continued to show appetite for funds of funds and the first half of 2011 saw the highest net retail sales of funds of funds on record,” said IMA chief executive Richard Saunders.