There was a mass exodus from European and Emerging Market Equity funds during Q4 2011 according to Skandia's latest Investment Trends report.
The eurozone debt crisis was rarely out of the news during the period leading to sales of European Equity funds falling by almost a quarter via the Skandia Investment Solutions platform. Emerging Market funds also took a surprise fall with sales decreasing by 19% compared to Q3 2011.
The analysis shows a swing back towards both UK and Overseas Fixed Interest funds, increasing 7% and 28% respectively, albeit Overseas Fixed Interest started from a low base. The UK Fixed Interest sector has been the highest selling sector since Q4 2008, and now accounts for nearly 23% of all fund sales through the Skandia platform.
Managed funds are the second most popular sector, accounting for 16% of sales, a 14% increase on Q3. The Managed sector may have been helped in part by the trend towards risk-targeted funds. Skandia's range of risk-targeted funds continue their rise in popularity, with 4 out of the 6 Spectrum funds now in the top 5% of fund sales, as investors seek managed investment solutions that are directly aligned to the level of risk they want to take in their portfolio.
Cash and Money Market funds did see a spike in Q3 (up 121%) but in Q4 sales have levelled off, falling 13%. In terms of risk assets, UK Equity and Global Specialist funds account for 15% and 10% of sales respectively with confidence returning to North American funds with sales increasing by 3%.
|
Sector |
% of sales in Q4 2011 |
% change since Q3 2011 |
|
UK fixed interest funds |
22.81% |
7.17% |
|
Managed |
16.00% |
13.97% |
|
Uk Equity funds |
15.03% |
-7.49% |
|
Global specialist |
10.35% |
-5.15% |
|
Cash/ Money markets |
9.81% |
-13.06% |
|
North American funds |
5.47% |
3.16% |
|
Property |
4.43% |
-5.27% |
|
Far East |
3.95% |
3.10% |
|
Emerging market equity funds |
3.73% |
-19.49% |
|
European |
3.46% |
-24.95% |
|
International fixed interest funds |
3.19% |
28.15% |
Graham Bentley, Skandia's investment expert, comments:
"It is encouraging that the spike in Cash and Money Market funds has dropped off, and investors are recognising the opportunities that exist in relatively depressed equity prices. However, the flight away from European equities is a short term knee jerk reaction in response to negative sentiment created by the eurozone debt crisis. The FTSE Eurotop 300 index is up about 10% since early October so once again this shows the pitfalls of trying to time the market.
"In times of stock market uncertainty it is crucial that investors are in well balanced portfolios that match their attitude to risk over the long term. This should give them the confidence to ride out short term volatility. Fixed Interest funds can be used to reduce overall portfolio risk if that is desired, which could account for their continued popularity.
"Risk-targeted funds are another great way to gain greater control over the volatility within portfolio. Demand for these funds is reflected in the popularity of managed funds and any investor concerned about volatility should take a look at this relatively new investment solution."
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