Fund flows into investment funds turned positive in November, reversing two months of consecutive outflows, according to new data from the Investment Association.
Data also showed that the top funds to invest in according to investors were passive trackers, with active funds once again experiencing weaker flows.
Net retail sales of investment funds totalled £1.6 billion during the month, with equities funds in particular swinging to net inflows of £243 million having seen £6.6 billion outflows over the previous two months. North American equities were most popular with net retail sales of £590 million, while global equities also saw an inflow of £400 million.
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While outflows from UK equity funds continued, they narrowed to £552 million, their best figure since August 2021.
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“Autumn was a tricky period for investors, with outflows driven by anticipated tax rises in the UK Budget,” says Miranda Seath, director, market insight and fund sectors at the Investment Association (IA). “With the Budget and US election now in the rearview mirror, equities looked to be back in vogue in November, with investors favouring North America and Global equity funds.
“Investors will be watching closely to see what the year ahead holds. Trump’s pro-business agenda is likely to fuel US growth further, potentially leading to higher inflation. However, the prospect of uncertainty lingers, as potential tariffs could significantly impact global trade."
Seath added that weaker UK economic data as well as increased National Insurance contributions for businesses could see prices increase.
"In this climate, both the Bank of England and Federal Reserve are likely to be cautious about cutting rates.”
Fixed income funds returned to inflows with £542 million net retail sales, while index trackers continued strong inflows, of £1.9 billion. Active funds, however, continued to post outflows, though these also slowed to their best level since 2021 (-£317 million).
Which funds were most popular during November?
According to Hargreaves Lansdown, these were the most popular funds during November (with the company’s own funds excluded):
Top funds, November 2024 (net buys, HL funds removed)
- UBS S&P 500 Index
- Legal & General US Index
- Fidelity Index World
- Legal & General Global Technology Index Trust
- Baillie Gifford American
- Legal & General International Index Trust
- Rathbone Global Opportunities
- Artemis US Smaller Companies
- Vanguard FTSE Global All Cap Index
- Artemis Global Income
Source: Hargreaves Lansdown
The IA’s data shows that tracker funds were generally the most popular, with £1.88 million of retail inflows during November, and Hargreaves Lansdown’s data supports this, with six of the top ten funds on its platform being passive.
“This is likely to be partly due to cost, but we should remember that the last few years have been tricky for active managers,” says Victoria Hasler, head of fund research, Hargreaves Lansdown. “When performance is led by a small number of large stocks it makes it very difficult for active managers to outperform. This situation is unlikely to last in perpetuity.”
The enduring popularity of low cost index funds poses a headache for active managers, such as Terry Smith whose Fundsmith Equity underperformed key benchmarks in 2024.
Which investment trusts were most popular during November?
The most popular investment trusts based net purchases, according to Hargreaves Landown, were:
Top investment trusts, November 2024 (net buys)
- JPMorgan Global Growth & Income plc Ordinary 5p
- Greencoat UK Wind plc Ordinary 1p
- JPMorgan American Investment Trust plc Ordinary 5p
- JPMorgan US Smaller Companies Investment Trust plc Ordinary 2.5p Shares
- Baillie Gifford US Growth Trust plc Ordinary Shares
- Supermarket Income REIT plc Ord GBP0.01
- NextEnergy Solar Fund Ltd Ordinary NPV
- Polar Capital Technology Trust plc ORD GBP0.025
- The Renewables Infrastructure Group Limited Ordinary Shares NPV
- F&C Investment Trust plc Ordinary 25p
Source: Hargreaves Lansdown
The Baillie Gifford US Growth Trust (LON:USA) is among seven investment trusts being targeted by US hedge fund Saba as part of a takeover bid. Baillie Gifford, which owns three of the seven trusts in total, has urged shareholders to vote against the takeover attempt at general meetings due to happen over coming weeks.
