Fixed interest Bond/savings accounts are still looking amazingly favourable as investors are increasingly wary of stock markets, with many dumping their UK shares and sheltering in more cautious investments, such as bonds.
According to figures from the Investment Association, a trade body, September was a record month for investments, with investors putting £5.6bn into funds.
It continues a record-breaking year, with investors putting £33.7bn into funds in the first nine months of 2017 – the highest amount ever.
However, the figures also reveal that investors are selling out of funds invested in the shares of British companies, with £103m pulled in September alone – a trend that has been seen all year.
Instead, they are sheltering in bond funds, with £4.9bn put into them in September – accounting for the lion’s share of the inflows.
Of that, £2.3bn was put into “strategic” bond funds, which hand the responsibility of picking between different bonds to the fund managers.
Laith Khalaf, of Hargreaves Lansdown, the fund shop, said: “Sales of bond funds have picked up significantly over the summer months, which is bizarre given the heightened expectations of rising interest rates over this period.
“Much of this money has flowed into strategic bond funds, which in theory have the flexibility to shelter investors from the worst ravages of rising rates on fixed income prices, if the manager makes the right calls.”
Jason Hollands, of broker Tilney Bestinvest, said investors are wary about the UK stock market.
“There is growing scepticism about how much longer this bull market can continue,” he said.
He put this down to concerns about Brexit, a fragile Government and the rising popularity of the Labour Party. The rest of investors’ money in September went to funds investing in Europe, America and global stock markets.