15th July 2013
Strategic bond funds have seen a surge of investors’ cash growing from 8% in the first quarter of the year to more than 14% in the second quarter according to fund platform Skandia.
The platform which does most of its business through independent financial advisers says buying behaviour within the fixed interest sector has changed dramatically with the potential tapering of quantitative easing in the US affecting investor confidence in traditional fixed income funds.
The firm says it believes investors are seeking to avoid potential losses from rising gilt yields, by shifting away from gilts and corporate bonds in favour of strategic bond funds, cash and money market funds.
“Strategic bond funds are increasing in popularity as these portfolios typically have the flexibility to navigate increasingly volatile fixed income markets,” it says.
Sales by sector
|Investment Sector||Q1 2013 net sales||Q2 2013 net sales|
|UK Fixed Interest||8.7%||14.8%|
|International fixed interest||6.9%||5.7%|
Within Equities, UK equities continue to dominate net equity fund flows says the firm through there has been a marked pick up in sales into North American and Japanese funds with emerging markets and China losing ground.
In terms of funds, First State Global Emerging Market Leaders still heads the net fund flow table with investors seeking to invest ahead of First State’s introduction of an initial charge on the fund later this year to protect the interests of existing investors.
Three UK fixed interest funds appeared in the top 10, two of which are strategic bonds; Fidelity strategic bond and the Jupiter strategic bond.
Top selling funds on the Skandia platform in Q2 based on net sales:
|First State Global Emerging Markets Leaders|
|Standard Life Global Absolute Return Strategies|
|Cazenove UK Opportunities|
|Old Mutual Corporate Bond|
|M+G Global Dividend|
|Old Mutual North American Equity|
|Newton Asian Income|
|Fidelity Strategic Bond|
|Invesco Perpetual Distribution|
|Jupiter Strategic Bond|
James Millard, director of investments at Skandia, says: “We are seeing a clear shift in the bond buying habits of investors. Strategic bond and global bond funds now dominate fund flows at the expense of gilt and corporate bond funds. This is largely due to Fed tapering becoming increasingly likely and bond yields rising over Q2. Equities continued to be popular as markets rose over most of this period, with Abenomics helping to spur the demand for Japanese equities before the retracement in the Nikkei, and the relatively strong economic results for the US attracting flows.”