Investment companies resilient as adviser platform purchases fall
Net demand for investment companies jumped 48% to reach all-time high.
Purchases of investment companies on adviser platforms reached a record high of £1.31 billion in 2022, representing growth of 1% on the previous year, according to data compiled for the Association of Investment Companies (AIC) by ISS Financial Clarity.
This was in the context of a general decline in purchases of all products on adviser platforms. Overall purchases in 2022 fell 7% to £183.82 billion, the biggest year-on-year fall since the AIC’s records began in 2011.
Net demand for investment companies jumped from £320 million to an all-time high of £474 million, an increase of 48%.
Popular sectors
Driving the positive net demand figure was the Flexible Investment sector, which accounted for 16% of all purchases of investment companies in 2022. The sector is home to investment companies that can invest in a mix of different assets, some of which aim to preserve investors’ capital in more difficult markets.
The second most popular sector by net demand in 2022 was UK Smaller Companies, which jumped from 26th place in 2021. This was despite a widening of the average discount in the sector from 8% to 11%1.
The Global sector ranked third by net demand, followed by Renewable Energy Infrastructure and Infrastructure.
Nick Britton, Head of Intermediary Communications at the Association of Investment Companies (AIC), commented: “Last year, investment companies saw their discounts widen in difficult markets, but this does not appear to have dampened demand from financial advisers and wealth managers. The jump in popularity of the UK Smaller Companies sector suggests that the deeper discounts on offer may have attracted some bargain hunters.
“The big picture is that demand for investment companies has remained resilient against a backdrop of declining platform purchases overall. Tough markets will always hit share prices and deepen discounts, but advisers are clearly looking beyond that to the strong long-term record of many investment companies and their ability to bounce back when markets recover.”
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Notes to editors
- The average discount of investment companies in the UK Smaller Companies sector was 8% at the end of 2021, widened to 14% by the end of June 2022, and finished the year at 11% at the end of December. Source: theaic.co.uk & Morningstar.
- The Association of Investment Companies (AIC) represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s vision is for closed-ended investment companies to be considered by every investor. The AIC has 350 members and the industry has total assets of approximately £272 billion.
- For more information about the AIC and investment companies, visit the AIC’s website.
- Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investment company shares, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all.
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