Retail sales saw a bounce in the final quarter of 2024, with six out of 10 fund groups reporting an increase in sales during the quarter, according to ISS Market Intelligence’s Pridham Report.
This represents a 20 percentage point increase from Q3 2024, as investor confidence returned to the market after a period of elections and the Autumn Budget.
Benjamin Reed-Hurwitz, EMEA Research leader at ISS MI, said: “Overall 2024 was a much better year for fund groups. While sales bounced back in Q4 from Q3’s annual low, significant outflows in September and October make it clear that investor sentiment is still fragile. The end of Q4 resurgence was driven by investors being able to move beyond UK budget uncertainty and investors looking to profit from soaring markets following the US election.
“Whether that can continue in Q1 2025 is hard to tell. Savings account rates remain attractive for many investors and markets have become twitchy in recent weeks. On and off again US trade wars with Canada, Mexico and China are denting confidence and the emergence of DeepSeek forced investors to reassess their bets on AI stocks. Will investors judge the risk/return equation to be attractive enough to justify moving out of cash?”
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Passive funds continued to be the main attraction for investors through the end of the year, with passive fixed income recording a quarter-on-quarter sales increase of 25%.
“Passive funds continued a long-running trend and once again dominated the sales charts in Q4. While the growth of passive equity is well documented, the fastest-growing fund type in Q4 was passive fixed income,” Reed-Hurwitz said.
“Investors and advisers are continually evaluating the cost of alpha and this has moved with speed to the fixed income portion of the portfolio. Investors are currently showing strong appetite for a low-cost way to tap into the higher yields currently on offer, especially now that inflation has come down.”
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However, active equity funds showed a rally with the second largest increase in sales by asset class quarter to quarter.
“Active management is not going anywhere. The active opportunity in 2024 was in fact quite improved from 2023 with gross sales growing considerable. A lot of active money continues to be put in motion as investors consider where active is best-positioned to drive risk-adjusted returns,” Reed-Hurwitz said.
“High alpha generation is increasingly top of mind, with a growing number of investors increasingly opting for more targeted, nuanced approaches to generating gains that potentially complement other passive positions held.”
BlackRock continued to lead fund groups in both gross and net sales for Q4, with £9bn and £2bn, respectively. In gross sales, Vanguard followed with £7.6bn and LGIM at £7bn. By net sales, LGIM beat out Vanguard with £1.9bn compared with £1.3bn. LGIM’s sales were a quarter record for the firm, with increases in both passive and active funds.
Artemis also managed a record quarter, with net sales of £1.2bn, the fourth-best out of the groups. It had gross sales of £2.7bn.
This story was written by our sister title, Portfolio Adviser
