3 June 2008: New tax year brings renewed confidence to funds investors

While sentiment amongst ISA investors at the end of the tax year was extremely cautious, the beginning of the new tax year and the apparent return of stability to the markets is starting to spark renewed investor confidence according to Barclays Stockbrokers Funds Market.  Assets invested in funds increased by 23% in April compared to the previous month and this trend has continued throughout May**. Although investors continue to favour cautious funds such as Money Market and Income Funds, the specialist sector was also extremely popular. In addition 39% of ISA investors intend to use their ISA allowance in funds this tax year, with 63% of investors definitely planning to take advantage of their ISA allowance.***

The most popular sector by assets invested was the Money Market sector, with the Fidelity Cash fund topping the list of funds invested in April with the BGI Liquidity First fund also ranking highly. Income and Bonds funds also remain popular with the Invesco Perpetual Corporate Bond Fund and the Fidelity Moneybuilder Income Fund taking high levels of investment. Blackrock’s Absolute Alpha fund also captured strong investment levels.Absolute Return funds are relatively new and are designed to perform in both rising and falling markets. The popularity of this fund suggests that clients are keen to find new ways to combat the impacts of market volatility.

But investors are increasingly looking to achieve growth from their funds with the specialist sector capturing 17% of April’s order flow.  Many investors used this sector to gain exposure to Emerging Markets with Threadneedle’s Latin America Fund in particular proving a popular choice.  In addition Blackrock Gold and General Fund and JP Morgan’s Natural Resources Fund continue to take high levels of investment.  Interestingly Asia Pacific, which has been attracting interest in previous months, has not seen as much activity suggesting a cooling off of interest in this area.  

Chris Stevenson, Associate Director, Funds Market, Barclays Stockbrokers comments:
“ISA season was dominated by market volatility and there wasn’t the usual flurry of fund sales in the approach to tax year end.  But with apparent stability returning to the market it is encouraging that investors are beginning to get back in and are making the most of their new ISA allowance. We have also seen significant inflows throughout May as well, suggesting this trend is set to continue. While unsurprisingly the more cautious funds continue to dominate, investors are also looking at specialist sector funds to gain returns from exposure to commodities and emerging markets, which suggests a renewed confidence in the markets.”

* Month on month statistics

** According to sales figures for Barclays Stockbrokers Funds Market, April and May 2008.

*** All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,500 adults who have invested in a stocks and shares ISA in the current tax year. Fieldwork was undertaken between 5-10 March 2008. The survey was carried out online. The data is unweighted.

For further information contact:

Caroline Wells / Nicola Hankey
PR, Barclays Wealth
020 7114 7435 / 020 7114 9813

OR

Chantal Heckford / Katie Hayward / Katherine Hobby
Lansons Communications
020 7294 3630 / 020 7294 3631 / 020 7566 9704
chantalh@lansons.com / katieh@lansons.com / katherineh@lansons.com