Tracker fund sales reached an all-time record of £5.7bn in Q2 spurred by a shift by investors into bond funds.

Bond funds saw a strong ‘bounce-back’ in sales to £5.5bn in Q2, according to latest figures from the Investment Association.

While tracker funds did very well in contrast equity fund sales were down in many sectors with total net outflows for equity funds of £474m in June.

Gross retail sales through intermediaries, including UK IFAs, were £7.6bn, representing a market share of 34% for advisers.

IA figures show: 

• Net retail sales saw a third consecutive month of inflows, with savers placing £2.3 billion into funds.
• Fixed income was the highest selling asset class for the fourth month in a row with net retail sales of £2.4bn.
• Tracker funds inflows reached £5.7bn in Q2, the highest quarterly inflows on record, significantly higher than the previous high of £3.4bn recorded in Q2 2017.
• £ Strategic Bond was the best selling IA Sector in June, with net retail sales of £1.1 billion.

Chris Cummings, chief executive of the Investment Association, said: “2019 has so far been a game of two halves in the fund market.

“Following £900m of outflows in the first quarter, savers returned in the second quarter to place £5.5bn into funds. Bond funds in particular saw a dramatic bounce back following the sell-off in the fourth quarter of last year, with net inflows of £4.8bn in the second quarter of 2019.”

“The picture is less positive for UK equities with political uncertainty remaining high. The brief respite from outflows in May proved short-lived and the year-to-date has been characterised by ongoing outflows.”

The five best selling IA sectors for June 2019 were:

1. £ Strategic Bond was the best-selling sector with net retail sales of £1.1bn.
2. £ Corporate Bond was second with net retail sales of £453m.
3. Global was next with net retail sales of £402m.
4. Global Bonds followed with net retail sales of £359m.
5. Mixed Investment 40-85% Shares was fifth with net retail sales of £27m.

The worst-selling Investment Association sector in June 2019 was Targeted Absolute Return with an outflow of £502m.

In terms of region, North America funds were the best-selling in June with net retail sales of £265m. Asia funds were the next best-selling with net retail sales of £68m. Global funds experienced net retail inflows of £7m.

Japan funds saw net retail outflows of £19m, followed by Europe funds which experienced net retail outflows of £124m. UK funds experienced net retail outflows of £744m.

Tracker funds saw a net retail inflow of £1.6bn. Tracker funds under management stood at £209bn as of the end of June 2019. Their overall share of industry funds under management was 16.7%.

Ethical funds experienced net retail inflows of £234m in June 2019. Funds under management were £19bn at the end of June, representing 1.5% of industry FUM.

In June, gross retail sales for UK fund platforms totalled £8.9bn, representing a market share of 39%. Direct gross retail sales in May were £1.4bn, representing a market share of 6%, said the IA.