Retail investors continued to pile into unit trusts and OEICs in November, buying a net £2.4 billion, according to Investment Management Association figures released today. Inflows are on course to reach a record £26 billion for 2009 as a whole – the previous highest annual total was £17.7 billion in 2000.
The November performance was particularly impressive given strong competition from National Savings, which attracted £2.8 billion, mostly into now-withdrawn "guaranteed growth and income bonds" offering a premium yield. Equity funds again enjoyed the strongest inflow (£930 million), followed by property (£420 million) and balanced (£250 million). Bond fund sales slumped to a 13-month low (£190 million), probably reflecting the National Savings effect.
Retail mutual fund inflows amounted to 1.2% of M4 excluding money holdings of "other financial corporations" in the six months to November. With investors reallocating portfolios away from cash, the sum of money growth and mutual fund flows is probably a better guide to liquidity support for the economy than M4 itself. This indicator – the green line in the chart – continues to revive, supporting recovery hopes. 