Fresh slide in fund sales

THE investment industry's 2004 'ISA season' kicked off with a fall in sales, new figures show. The Investment Management Association (IMA), an industry body, said the net flow of money into Isas fell 13% from £209m in December to £184m in January.

Demand for trusts wrapped in tax-free individual savings accounts traditionally rises in the months before the end of the 6 April tax-year as investors rush to take advantage of unused allowances.

However, the IMA pointed out that the figure was a vast improvement on sales of £156m a year before. It also pointed to a doubling of investment into all funds by individuals, from £249m a year ago to £505m in January, although again the figure was down on December when sales hit £844m.

'Retail investment continues to run ahead of last year and investors have clearly regained some appetite for equities,' said Richard Saunders, chief executive of the IMA. 'While it is likely to be some time before confidence is fully recovered, the picture does appear to be one of steady improvement.'

Year-on-year, January saw total investment funds under management increase 32% to £243bn, largely a by-product of the near-40% recovery in the UK stock market since the end of last January.

The most popular sector continued to be 'UK all companies', accounting for 21% of gross retail sales, followed by 'UK corporate bond' representing 12% of sales.

A boom in bond fund sales attracted concern from financial advisers, fearing stock market-weary investors were chasing other assets that had performed well regardless of their future prospects.

Figures for individual investors revealed funds from the 'UK all companies' and 'UK equity income' sectors were most popular last month.