Investment company purchases on adviser platforms reach record high in first quarter of 2021

Over 1,800 firms are using investment companies.

Increase graph finger 2021

Purchases of investment companies on adviser platforms reached £368m in the first quarter of 2021, setting a new quarterly record, according to data compiled by Matrix Financial Clarity.

This was a 22% increase on Q4 2020, in which purchases were £301m – the previous record. It also represents a 35% uplift on Q1 2020 (£273m).

The number of firms buying investment companies between January and March this year was 1,882, the highest number since the spike in Q3 2016 following the EU referendum and the suspension of several open-ended property funds. The 1,882 firms purchasing investment companies included 1,730 financial advice firms and 51 wealth managers.

Net demand for investment companies on adviser platforms (purchases minus sales) in Q1 2021 was £92m, the highest since Q4 2018.

Nick Britton, Head of Intermediary Communications at the Association of Investment Companies (AIC), said: “Demand for investment companies via adviser platforms began to recover towards the end of last year, and the latest available data shows that this trend continued into the first quarter of 2021, setting a new record.

“Meanwhile, the number of firms using investment companies is the highest it’s been since 2016, and if you exclude the spike in the third quarter of that year when several open-ended property funds were suspended, it’s the highest ever. The most popular sectors include a mix of equity and alternatives such as property and infrastructure, demonstrating that advisers are seeing a broad range of benefits in the investment company structure.”

Popular sectors

The most popular sectors for adviser platform purchases in Q1 2021 were Global (18% of purchases), UK Equity Income (7%), Global Smaller Companies (6%), Infrastructure (6%), Flexible Investment (5%) and Property – UK Commercial (5%).

However, looking at net demand (purchases minus sales) paints a different picture. In Q1 2021, the most popular sector by this measure was Commodities and Natural Resources, as concerns about inflation prompted advisers and wealth managers to increase their clients’ exposure. The second most favoured sector by net demand was Global Smaller Companies, followed by Infrastructure, Global Equity Income and Asia Pacific.

The UK Equity Income sector returned to positive net demand (more purchases than sales) in the first quarter of 2021, following three consecutive quarters of net selling on adviser platforms. In 2020, 91% of UK Equity Income investment companies either increased or maintained their dividends, compared to just 4% of open-ended funds in the equivalent IA sector.

Most used platforms

Transact remains the most used adviser platform for investment company purchases, with an estimated 43% share of purchases. FundsNetwork handled 14% of purchases, Ascentric 11% and 7IM 9%.

-ENDS-

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Notes to editors

  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 362 members and the industry has total assets of approximately £257 billion.
  2. 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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