18 Feb 2008 Investors Seek Shelter in Cash Funds

Although specialist sectors were popular with investors in 2007, it was the cash funds which dominated the fund flows according to Barclays Stockbrokers. Money Market funds accounted for 39% of assets invested in 2007 through Barclays Stockbrokers and much of this can be attributed to the market volatility that kicked in at the end of last year.

Up until Q3 fund flows were positive, with investors buying a mixture of cautious and growth investments, but the focus very much shifted to cash investments in the latter half of the year. Despite this Gartmore China Opportunities fund was the third most popular fund purchased through the Barclays Stockbrokers Funds Market in 2007.

Investors were more cautious in their 2007 investment decisions compared to those made in 2006; with the cautious sectors dominating (see table below). In 2006 the specialist and global emerging market sectors were the most popular with investors but this has been replaced with a focus on Money Market and UK Equity Income Funds in 2007.

Yet the Asia Pacific (excluding Japan) sector showed unparalleled growth in 2007 moving from sixth in 2006 to second place in 2007. In terms of individual funds, the specialist sectors ranked high, with JP Morgan Natural Resources and Blackrock Merrill Lynch Gold & General ranking fourth and fifth respectively by assets invested.

Amy Nauiokas, MD and Head of Barclays Stockbrokers says: “Last year was a mixed year for funds investors, at the start of the year we experienced strong sales for income and growth funds but as the markets experienced volatility from Q3 onwards investors started moving into more cautious funds. The dominance of the Money Market and Equity Income sectors reflects the cautious nature of our clients in 2007. But there are some investors who continue to find opportunities in more diverse markets, with the Asia-Pacific, Specialist and Emerging Markets sectors remaining popular.”