Investment company purchases on adviser platforms reach new record in 2020, but net demand falls

Growth-focused sectors saw highest net demand.

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Purchases of investment companies on adviser platforms reached £1,068m in the 2020 calendar year, setting a new record, according to data compiled by Matrix Financial Clarity. This was an increase of 11% on 2019 (£966m). The previous record was £973m in 20181.

The year ended particularly strongly with record purchases of £301m in the fourth quarter, the only time that quarterly purchases have topped £300m.

Net demand for investment companies (purchases minus sales) remained positive in 2020, but fell 15% to £258m (2019: £302m).

The number of firms purchasing investment companies on adviser platforms was 1,746 in the fourth quarter of 2020, the highest since the aftermath of the EU referendum (Q3 2016: 2,014) when many open-ended property funds were suspended.

There was a contrast between the sectors seeing the highest level of purchases, and those seeing the highest net demand.

The most popular sectors in 2020 according to purchases were Global (with a 16% share of all purchases of investment companies on adviser platforms), UK Equity Income (8%), Property – UK Commercial (7%), Infrastructure (6%) and Flexible Investment (6%).

However, the five most popular sectors by net demand had more of a ‘growth’ than an ‘income’ flavour. They were Global Smaller Companies, UK Smaller Companies, Biotechnology & Healthcare, Technology & Media, and Private Equity.

Nick Britton, Head of Intermediary Communications at the Association of Investment Companies (AIC), said: “Purchases of investment companies on adviser platforms reached a record high of over £1 billion in 2020, but net demand fell compared to 2019. This was partly due to some heavy selling of income-focused sectors, such as UK Equity Income and Infrastructure, in the second half of the year.

“We recognise that more needs to be done to improve advisers’ familiarity and comfort with investment companies. We moved our education programme online last year and have continued to train hundreds of advisers about investment companies and VCTs. It’s encouraging to see the number of firms purchasing investment companies on adviser platforms reach a four-year high of 1,746 in the final quarter of 2020. I’m confident that the message about the greater suitability of closed-ended investment companies to invest in less liquid assets, including property, is getting through to advisers and wealth managers.”

The most popular adviser platform for purchases of investment companies in 2020 was Transact, with a share of 52%. Ascentric and 7IM each accounted for a further 11% of investment company purchases.

-ENDS-

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Notes to editors

  1. Total purchases of investment companies on adviser platforms were £924m in 2017, £632m in 2016, £634m in 2015, £481m in 2014, £400m in 2013, £219m in 2012, and £179m in 2011.
  2. 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 361 members and the industry has total assets of approximately £237 billion.
  3. 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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