Corporate bonds were the most popular investment in August, according to the latest sales data for the investment management industry.
Figures published by the Investment Management Association on 29 September showed inflows to funds overall continued to be strong with net retail sales at £2.3billion.
Activity in the ISA market was the lowest in August compared to any other month this year but net sales were £16million higher than August 2009.
Bonds were the leading asset class, with net retail sales at £1.2billion, following figures for July showing a similar picture. Surpassing the £1billion mark, net sales returned to their peak level from December 2008 to May 2009.
The IMA defines the corporate bond sector as a fund investing at least 80 per cent of their assets in corporate bond securities with ratings of BBB minus or above, as measured by Standard & Poors or an equivalent external agency.
Equities were the second highest selling asset class, with sales of Absolute Return funds pushing the sales figure for assets classed as ‘other’ up to £328million from £58million in July.
Property funds remained unpopular with net sales down on the previous month.
In terms of how funds were sold, fund platforms maintained their 37 per cent market share, with other intermediaries such as wealth managers and stockbrokers recording a market share of 52 per cent.
Direct channels sales were up one per cent in August with 11 per cent of sales.
Some commentators have speculated that bond prices may currently be overinflated, with a bubble forming as investors pour into the market.
Retail bond market
This week the London Stock Exchange announced an increase in the number of instruments available for trading on its Order book for Retail Bonds.
Evolution Securities are acting as the ‘market maker’ offering private investors continuous two-way prices in bonds issued by companies like HSBC, Barclays, FirstGroup and EDF Energy.
Pietro Poletto, head of fixed income markets at the Exchange, said: “This flood of new bonds marks a significant milestone in our mission to open up the bond market for private investors in the UK.”
He said the moves gave transparent access to nearly 150 gilts (government bonds), supranational and corporate bonds through the retail bond market.
© Fair Investment Company Ltd