Retail fund sales turned positive in August for the first time since April; overall net retail sales were £1.7bn.
However this was driven by £1.2bn of inflows into fixed income funds, with equity funds still witnessing an outflow of £629m, driven by outflows from Specialist and European sectors.
Property fund transactions were flat – no great surprise seeing as trading in so much of the sector was suspended during August.
Bond funds were the winners from the post-Brexit fund bounce, as a result of loose monetary policy grinding into gear once again. Investors clearly decided not to fight the Old Lady of Threadneedle Street and to just go with the flow.
That has certainly been the right call since quantitative easing was introduced seven years ago, though bonds are yielding ever less while monetary policy is surely bumping up against the law of diminishing returns.
Meanwhile investors are not quite as convinced that monetary stimulus is going to feed through into the stock market, as equity funds continued to see selling pressure.
The stock market itself is flying high though, thanks to a falling pound and lower interest rates. However animal spirits are subdued, which tells us that while the Footsie may be close to its historic high, irrational exuberance is by no means in the driving seat.
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