Sales of investment funds have gone through the roof this year, as investors increasingly ditched cash to chop and change between bonds and equities.
Total net retail sales hit £18.7 billion during the first nine months of 2009, according to the Investment Management Association (IMA). This is more than the total sales achieved in the whole of 2000, which previously boasted the highest annual sales on record.
Equities took over from bonds as the most popular asset class during the nine months to September 2009, with net retail sales of £1 billion. The absolute return sector was the best-selling sector, taking over from corporate bonds after 10 months at the top.
The record figure for 2009 comes after September became the sixth consecutive month in which sales topped £2 billion. August also saw the sales for the month ever.
The figures suggest that, although the UK is still officially in recession, investors continue to be tempted back into the stockmarket.
The £2.7 billion net sales witnessed in September is a stark contrast to what was happening in September 2008, when investors sold holdings as quickly as possible - net sales were a depressing minus £29.4 million.
"Investors are showing an increasing interest in equity funds, after a period in which bonds have dominated," says Richard Saunders, chief executive of the IMA. "The geographic spread is wide, with significant flows into funds investing other than in the UK."
Investors are also dipping their toes back into bricks and mortar; property funds saw net retail sales hit £261 million in September, more than double the £129 million achieved in August, and the highest since June 2007.
ISA sales, meanwhile, totaled £162.3 million, the seventh consecutive month for positive net sales. The most popular fund choice for ISA investors in September was the UK all companies sector.
Elsewhere, new research published by IMA on fund management costs and performance found that the actual cost of investing in the average UK tracker fund is broadly similar to the published total expenses ratio (TER). This, the organisation says, contradicts claims that funds are subject to large hidden charges.
'"The cost of investing in tracker funds came out lower than the TER over 10 years, whereas if there were hidden costs you would expect the actual costs to work out higher," IMA said in a statement.
It also found that costs did not drag down performance for actively managed funds. Over the last 10 years the average actively managed UK all companies fund performed better than the FTSE All Share index after charges.
"This means that the impact of the investment choices made by fund managers has more than offset the costs involved."
Martin Bamford, managing director of IFA firm Informed Choice, says it is a myth that funds are subject to large hidden charges. The obsession with charges has partly been driven by the passive funds lobby, he adds.
"They are almost evangelical in the belief that passive is the only way in which to invest," Bamford explains. "In reality, much of the academic research they rely upon to justify their arguments is flawed and not a fair comparison with the active management approach."