New News Item 06 May 2016

Pridham report reveals worst first quarter for over 20 years

China and Brexit spook investors

The first quarter of the year was the worst for the fund management industry in over 20 years in terms of inflows, with firms suffering as a result of market turmoil in China and uncertainty around Britain’s membership of the EU.

The latest Pridham Report has seen Fidelity reach its highest position in the net retail sales table in over a decade, while newer entrants such as Fundsmith and Woodford Investment Management dominated the sales charts.

The report shows the largest fund houses are the most susceptible to outflows and switching activity, even though their gross sales remain strong, while smaller businesses have held up better in terms of net flows.

Pridham Report: Which groups topped the retail sales chart in 2015?

Helen Pridham, editor of The Pridham Report, said: "Groups such as Invesco Perpetual and Schroders still have plenty to offer investors which accounts for their high gross sales.

"But newer and smaller groups have less mature business on their books so their net positions look better even though their current sales are not as high as some of the more established groups."

Fundsmith has topped the net retail sales chart in Q1 with inflows of £604m, followed closely by Woodford IM, which attracted an estimated £550m.

The reportattributed Fundsmith's success to the "simple investment process" of Terry Smith (pictured), manager of the £5.9bn Fundsmith Equity fund, as well as the "generous press coverage" the product received as it reached its fifth anniversary last November.

Among the smaller groups, Miton has also posted strong flows, attracting £231m in net money, with its actively-managed portfolios particularly popular with investors. However, the report warns the firm is likely to experience withdrawals in Q2, following the departure of two of its prominent fund managers, George Godber and Georgina Hamilton.

Meanwhile, Fidelity has seen a turn in fortunes, attracting £1.9bn in gross sales and £278m in net inflows as a result of improved investment performance, as well as the appeal of products such as Moneybuilder Income and Global Dividend.

Aviva Investors is also seeing success with its Multi Strategy Target Return and Target Income funds, attracting £176m in net assets.

However, Pridham warned: "The first half of this year is going to be tough for many fund managers. Until the European referendum has taken place, many investors will continue to be hesitant to commit."