Tracker funds soar in popularity

Tracker funds have enjoyed the highest net sales on record during the first three months of this year, according to the Investment Management Association.

Net retail sales reached £824 million from January to March.

As a result, the amount of money in tracker funds is now a record £39.8 billion, up 19 per cent on the last quarter. This accounts for a record 6.8 per cent for all funds under management, with nearly half of them tracking the FTSE 100.

Richard Saunders, chief executive at the IMA, says: ‘Quarter one’s statistics show a growing appetite for tracker funds, with the highest net retail sales of trackers on record. Although tracker funds account for a modest 7 per cent of total funds, this proportion has been growing steadily over the past two years.’

The IMA figures also show that funds of funds remain popular with investors, with gross retail sales accounting for £1 in every £8 invested. This represents 10.4 per cent of total funds under management, up 31 per cent from last quarter. There’s now just over £60 billion invested in these products, with the majority invested in balanced portfolios.

While trackers and funds of funds continued to sell well, ethical fund sales took a battering with net retail sales of £90 million below the £97 million average for the past four quarters – representing less than 1 per cent of total sales. Despite this, the £7 billion of ethical money currently under management was up 15 per cent on the last three months of 2010.

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