After a long period of neglect, investors are finally warming to UK funds again off the back of the success of the vaccine rollout.
The latest set of Investment Association figures show savers invested £472m into funds in the UK All Companies sector. It comes as the country starts to open up and investors pin their hopes on a splurge in consumer spending and a boost to retail, travel and leisure.
“The beginning of Spring saw the thawing of investor sentiment towards UK companies following the successful rollout of the coronavirus vaccine and broader growth in business confidence,” Chris Cummings, chief executive of the IA said.
While most money has gone into larger UK companies, savers have ploughed £217m into the country’s smaller companies.
“These often fare better when investors are in ‘risk-on’ mode and that’s exactly what we’ve recently seen,” Kate Marshall, acting head of investment analysis at Hargreaves Lansdown said.
While the UK funds are gaining in popularity as a result of growing business confidence, global funds are still attracting the vast majority of cash across a range of funds and sectors.
Savers invested £4.4bn into funds in March, with the first quarter seeing net retail inflows of £10bn. The IA’s global sector was the best-selling sector in the three months to March with £3.6bn inflows, followed by ‘Mixed Investment 40-85% shares’ with net retail sales of £1bn.
“Despite the recent change in sentiment, global funds are still taking the lion’s share of investors’ money. That said, it’s good to see investors taking an active interest in other areas, with flows spread across a range of funds and sectors,” Marshall said.
Responsible investment funds saw a net retail inflow of £1.6bn in March bringing funds management to £66bn.
The worst selling sector in March was corporate bonds with an outflow of £1.5bn.