The fund groups winning and losing from the crunch

The fund groups winning and losing from the crunch

Absolute return funds have dominated fund sales during the credit crunch with Mark Lyttleton’s Blackrock UK Absolute Alpha product a top performer over the past quarter, according the confidential Lipper Feri UK Fund Sales Report obtained by Citywire.

Over the past three months inflows into the Lyttleton fund have exceeded £500 million, around £350 million net of redemptions, accounting for a large proportion of Blackrock's £1.4 billion total gross sales and 50% of its £845.4 million net retail sales.

The surge has been so phenomenal that the group has now managed to overtake long-term leader Invesco Perpetual in the table of top ten groups by gross retail sales. The ousted Invesco Perpetual saw inflows of £1 billion with M&G following on £850.2 million.

Other top-performing funds in the sector include Cazenove's UK Absolute Target fund which was launched in July and is managed by Tim Russell. The response to the fund, which follows a similar model to the Blackrock formula, was so good that it saw the group propelled into ninth place in the in the net retail sales charts with figures reaching £79.1 million.

Managing director at Cazenove, Robin Minter-Kemp, said the product was part of a plan hatched in 2003 to offer a complete range of uncorrelated funds. However, he feels there is still a long way to go in educating intermediaries about such products as they are still cynical about products which offer 'protection'.

Meanwhile, another group to benefit from the Absolute Return trend is Insight after its Diversified Target Return fund helped the group to enter the top ten retail sales chart for the first time at £57.3 million.

The fund's attractiveness may be questionable going forward however after managers Patrick Armstrong and Ana Cukic-Armstrong announced their departure earlier this month.

Not all the funds in the newly-created sector have performed well in the current market conditions however and a leaked memo from the Investment Management Association IMA suggests that some may have attempted to leave in a bid to avoid unfavourable comparison.


In a circular sent to members the IMA said funds that had elected to be in the Absolute Return must stay for at least 12 months unless they can clearly demonstrate an error in the original sector selection or show steps have been taken to re-position the fund objective.

The groups with the worst-performing funds in the sector since its launch include BNY Mellon Evolution Global Alpha, Insight Absolute Emerging Market Debt and Newton Offshore Strategy Alternative Assets. All have denied plans to move out of the sector.

Elsewhere, BNY Mellon has come under the limelight for rising sales of its Income funds. The group has bucked the trend for some time but Q3 proved to be its best season yet.

Head of distribution at BNY, Paul Feeney, said this was due to a re-focus of the business on the retirement field of the market. He said: 'The retirement market has tended to be dominated by the life and pensions companies. But I believe we can provide what people really need in retirement which is income to live on and capital which is not at risk.'

In terms of funds under management Invesco Perpetual remains in the lead with £25.6 billion. Second place is taken by Fidelity at £22.1 billion followed by Legal & General on £20.8 billion.

In the offshore space funds saw total redemptions reach £832 million in the third quarter with gross retail sales down over 40%. Cash funds were the most popular during the period with Henderson topping the net sales table due to large flows into its Liquid Assets Fund. Henderson's onshore UK Equity Tracker fund also did well with inflows reaching £384.5 million. The Henderson Pan European Enhanced fund was not so favourable with outflows topping £865.5 million.

Other popular funds in the onshore arena included the Martin Currie North America fund, the Standard Life Global Absolute Returns Strategy product and the Fidelity FIF Special Situations fund.

At the other end of the spectrum the funds which saw the highest outflows included Artemis European Growth, Threadneedle UK Institutional, and SLTM UK Government Bond fund.

LIPPER FERI UK FUND SALES REPORT

Top net gross retail sales (£m)

Blackrock 1,432.3

Inv Perpetual 1,083.3

M&G 850.2

SWIP 761.4

BNY Mellon 723.6

Top net retail sales (£m)

Blackrock 845.4

M&G 335.0

SWIP 301.04

BNY Mellon 286.0

Martin Currie 203.6


CITYWIRE.CO.UK