15 Aug 2016 Pensions save the day for platforms (Q216 results)
The first half of 2016 was challenging for fund groups and platforms alike. The stock market correction eased up as the second quarter began — in time for last-minute ISA activity — but Brexit scared off many investors who chose to hold off until after the referendum. Only pension flows broadly maintained their momentum.
According to the Fundscape Platform Report, as a result of investors switching and taking shelter in cash and safe products, gross flows for the quarter swelled to £24bn (£22bn in Q116), but net sales fell to £9.57bn (£9.6bn in Q116), the lowest total since Q3 2014 (£8.8bn). Bella Caridade-Ferreira, CEO of Fundscape, said “Investors lost their nerve in the final weeks before the Brexit vote and cashed out. Platforms without decent cash facilities would have felt the pain more keenly.”
Despite lower sales, asset growth for the quarter was comparatively strong. Total platform assets expanded by £20bn to £432.5bn as at end June, a rise of 4.8% in the quarter against the FTSE All Share’s 3.5%. The year-to-date total was even stronger with assets up £30bn or 7.5% compared to the FTSE All Share’s 2.1%.
Two platforms in particular boosted the asset base. Alliance Trust completed its Stocktrade acquisition during the quarter adding a further £3.4bn in assets, an increase of 40%, while Aegon continued to transfer legacy assets to its platform and saw assets jump by 21%. Aegon has even loftier ambitions; as announced last week, it will acquire Cofunds by the end of the year. Its assets will balloon to c£110bn (including BlackRock DB assets of £12bn) taking it to the top of the AUA table.
Aviva and Zurich were also home to strong growth with assets up by 10.3% and 9.2% respectively. Both have made significant inroads with their platform propositions and as a result have been home to a steady rise in net sales as demonstrated by the sales tables below. D2C platform, Hargreaves Lansdown, continues to lead the net sales stakes by some margin while Standard Life is in second place for both the quarter and the year.
“Pensions saved the day in the second quarter. Net ISA sales were down 79% on like-for-like sales in 2015, so it’s been a painful ISA season for the industry. However, pension, Sipp and workplace savings together accounted for £6.5bn of net flows, proving that when investing for the long term, investors tend to be more resilient and pragmatic. The Brexit vote is unlikely to change this, so sales patterns in the second half of the year should be similar”, said Caridade-Ferreira.
Notes to Editors:
The Platform Report is a confidential report published by Fundscape LLP. To subscribe to the report, platforms must contribute asset and sales data on a quarterly basis. For further information about the report and Fundscape, please visit www.fundscape.co.uk.
A total of 19 platforms are included in the analysis. Platform coverage is estimated at 98% of the platform universe.
*For timing reasons and because the data is market sensitive, Hargreaves Lansdown and Cofunds report their figures to Fundscape a quarter in arrears. The figures shown here have been estimated from Q116 data/interim results and trends.
**Includes legacy assets transferred onto platform.
For further information or background please contact:
Bella Caridade-Ferreira tel: 020 7720 1183 email: firstname.lastname@example.org