Equities in favour as investment fund sales hit a record £1.81bn

INVESTMENT fund sales set a record in January as investors starved of returns from cash regained their appetite for equities.

Investors piled a record 1.81 billion of new money into unit trusts and open-ended investment companies (OEICs), in January, a record for the month and 55 per cent higher than in January 2009, the Investment Management Association (IMA) revealed yesterday.

Equities accounted for 30 per cent of net retail sales, with bonds – the most popular asset class for the bulk of last year – accounting for 17 per cent.

Corporate bonds, the biggest selling IMA sector in 2009, was its worst performer in January with outflows of 228 million.

UK equity funds also fell out of favour with investors, with the UK All Companies sector the least popular equity category. In the same month last year, UK Equity Income funds had been the top equity selection. Instead investors piled into property funds in January, the biggest seller for the fourth consecutive month as confidence returned to the commercial property sector.

Net sales of tax-free individual savings accounts (Isas) reached 174m, down from 209m the previous month but compared with just 2m in January last year.

Richard Saunders, chief executive of the IMA, said: "Equities proved more popular than bonds, in contrast to a year ago.

"Equity investors appear to be becoming more adventurous, preferring the global, Asian and North American sectors to the UK and Europe."