Advisers’ investment company purchasing patterns shift in Q1 2022

The first quarter of the year saw a shift in the most popular investment company sectors on adviser platforms, according to data from the Association of Investment Companies (AIC) compiled by ISS Financial Clarity.

The Commodities & Natural Resources sector saw the biggest jump in popularity. Ranked by net demand, it shot to fifth place from 55th place the previous quarter, as investors were attracted by its inflation-busting potential. It was also the best performing AIC sector in the first quarter of 2022, with a total return of 30%.

Most UK-themed sectors also saw positive net demand trends, with UK Smaller Companies jumping from 23rd place in Q4 2021 to fourth place in Q1 2022, UK Equity Income from 58th place to ninth, and Property – UK Residential from 61st to 14th.

Property – UK Logistics bucked this trend, however, falling from the highest-ranked sector by net demand in Q4 2021 to the lowest-ranked out of 61 sectors in Q1 2022.

One sector that did not change its position was Flexible Investment, which ranked second by net demand in both the first quarter of this year and the final quarter of 2021.

Total purchases of investment companies on adviser platforms reached £343 million in the first quarter of the year, up 2% from the previous quarter but down 11% from the same quarter of 2021, which was a record quarter for purchases. The level of purchases in Q1 2022 was the second highest ever.

By net demand on adviser platforms (purchases minus sales), Q1 2022 was the strongest quarter for investment companies since 2018. Purchases exceeded sales by £109 million.

Nick Britton, Head of Intermediary Communications at the Association of Investment Companies (AIC), said: “The first quarter of the year saw some big shifts in net demand for several investment company sectors on adviser platforms. There seems to have been a reappraisal of the attractions of the commodity and UK equity sectors in particular, perhaps in response to higher inflation and geopolitical concerns.

“Stepping back from the detail, the general levels of purchases and net demand remained strong in the quarter, which was the second-strongest ever for total purchases and the best for net demand since 2018. While the changing investment landscape may have shifted advisers’ preferences, they’re still finding that investment companies have plenty to offer their clients.”

Most popular sectors by net demand in Q1 2022

Source: AIC/ISS Financial Clarity.

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1. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the 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 mission statement is to help members add value for shareholders over the longer term. The AIC has 360 members and the industry has total assets of approximately £266 billion.
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