BlackRock tops retail fund sales

LONDON (Reuters) - Fund firm BlackRock (BLK.N) held onto the top spot for net sales of British funds to retail investors in the second quarter, according to industry data, helped by sales of its hedge fund-style UK Absolute Alpha fund.

BlackRock had 879.2 million pounds of net sales, up from 713.6 million pounds in the first quarter, according to Lipper Feri's Fund Sales Report.

The report comes as the funds industry faces lower sales due to volatile and falling markets and investor caution. According to the Investment Management Association, net retail sales were 139.5 million pounds in June, down from 747.8 million pounds a year before.

BlackRock's sales were lifted by Mark Lyttleton's 1.5 billion-pound UK Absolute Alpha fund, which uses hedge fund-style techniques such as shorting -- betting on a lower price for a security in the future -- and pairs trades -- buying one stock and shorting another in the same sector. Investors have been attracted by the fund's ability to make money, helped by these techniques, in the turbulent market conditions since the onset of the credit crisis last summer. Over the past year the fund is up 12.6 percent, while the FTSE All Share index .FTAS is down 13.3 percent.

Last week Lyttleton told Reuters he had recently increased his short position in banks and expected most British banks to raise capital in the next 12 months. Invesco Perpetual, part of U.S. group Invesco (IVZ.N), was second with 813.9 million pounds of net sales in the second quarter, helped by sales through pension plans and flows into its corporate bond funds.

Invesco Perpetual was the top-selling group a year ago thanks to the popularity of its Income and High Income funds, which are run by Neil Woodford, one of the UK's top fund managers. In the first quarter of 2008 it was third-placed. Scottish Widows Investment Partnership was third in the second quarter of 2008 with 571.3 million pounds of sales, while M&G, the fund arm of Prudential (PRU.L), was fourth and Jupiter was fifth.

Overall industry sales in the second quarter were helped by a growing trend for savers to buy funds through pension policies such as SIPPs (self-invested personal pensions), the report said.

"Sales of funds via pension plans have become increasingly important to a growing number of asset managers in recent years," said Helen Pridham, author of the report. "However, even this is not enough to take up the slack when retail investors start favouring cash savings accounts instead of funds and institutions decide their money can be put to better use elsewhere, as they did in June."

Lipper Feri is a Thomson Reuters company.