After months of outflows, investors returned to equity funds in July with the highest sales since December 2021, according to data from fund manager trade body the Investment Association (IA).

Falls in inflation and a better growth outlook improved investor sentiment, the IA said.

Key figures for July were: 

• Net retail sales topped £1 billion in July, with Equity funds returning to inflows with £816m invested  
• Mixed asset funds and Fixed Income funds saw inflows of £861m and £520m respectively 
• £ Corporate Bond was once again the top-selling sector with net retail sales of £287 million 
• North American equity funds experienced a third month of outflows with £1.46 billion taken out from May to July 

Total funds under management in July were slightly higher compared to 2022 at £1.44 trillion (July 2022: £1.43 trillion).

IA chief executive Chris Cummings said:   “As the rate of inflation starts to fall more markedly and recession expectations moderate, sentiment is becoming more positive.

“Whilst investors had been reducing their investments in recent months amidst a very unclear economic outlook, July saw net sales of just over £1bn. Equity, fixed income and mixed asset funds all benefited from this renewed optimism, with inflows into equity funds reaching £816 million – the highest since December 2021.” 

BEST SELLING INVESTMENT ASSOCIATION SECTORS   

The five best-selling Investment Association sectors were:  

1. £ Corporate Bond with net retail sales of £287 million. 
2. Volatility Managed with net retail sales of £251 million.  
3. Global Equity Income followed with net retail sales of £243 million.  
4. Corporate Bond with net retail sales of £209 million.  
5. Short Term Money Market was fifth with net retail sales of £132 million.  

The worst-selling Investment Association sector in July was UK All Companies, which experienced outflows of £710 million.  

NET RETAIL SALES BY ASSET CLASS  

Mixed Asset funds saw inflows of £861 million. 

Equity funds saw inflows of £816 million. 

Fixed Income funds saw inflows of £520 million.  

Property funds experienced £86 million in outflows. 

Other funds saw £171 million in outflows. 

Money Market saw outflows of £912 million. 

NET RETAIL SALES OF EQUITY FUNDS BY REGION  

Global funds saw net retail inflows of £318 million. 

Japan funds experienced inflows of £31 million. 

Asia funds saw net retail inflows of £18 million.  

Europe funds saw outflows of £47 million.  

North America funds saw outflows of £470 million.  

UK funds saw outflows of £1 billion. 

Source: IA

Tracker funds saw net retail inflows of £702 million in July 2023. Tracker funds under management stood at £301 billion at the end of July. Their overall share of industry funds under management was 20.9%. 

Responsible investment funds saw a net retail outflow of £39 million in July 2023. Responsible investment funds under management stood at £98 billion at the end of July. Their overall share of industry funds under management was 6.8%.  

Gross retail sales for UK fund platforms totalled £13.1 billion, representing a market share of 34.8%. Gross retail sales through other UK Intermediaries, including IFAs, totalled £12.4 billion, representing a market share of 32.9%. 

Gross retail sales for Discretionary Managers totalled £1.7 billion, representing a market share of 4.6%. Direct gross retail sales totalled £6.9 billion, representing a market share of 18.3%. In July, execution-only intermediaries totalled £480 million in gross retail sales and accounted for 1.3% of the market.