10 May 2016 A rocky start to the year for the platform industry as brexit fears bite – Q116 Platform press release
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Chinese concerns and Brexit fears spooked the stock markets and sent retail investors scurrying for cover in the first quarter. Stock markets have since been home to a modest recovery, but with the Brexit referendum approaching fast, investors are putting some investments on hold.
According to the Fundscape Platform Report, despite volatile markets and stock market growth of 1% in the first three months of the year, platform assets under administration rose by 3% (£13bn) to £415bn. Gross platform sales in Q1 totalled £21.2bn, marginally higher than sales in Q415, but down 7% on the first quarter of 2015. With investors running scared, the net sales total slipped below £10bn (£9.4bn) for the first time since Q314.
Three platforms (Cofunds, Fidelity and Hargreaves Lansdown) have assets of more than £60bn. Between them, they account for just under half of total industry assets and their sheer size guarantees them a place in the gross sales table.
However, being ‘weighty’ is not a factor in the net sales table where smaller platforms dominate. Standard Life was second overall. For an established platform, the Standard Life Wrap continues to grow at an impressive rate thanks to working closely with advisers to understand their needs and with being able to leverage different parts of the value chain. The strategy is clearly paying off since Standard Life was the only platform to record net sales of more than £1bn through the retail advised channel. More growth is on the cards with the recently announced acquisition of the Axa Elevate wrap.
Third for net sales was another Scottish provider, Aegon, where strong net sales were partly due to the transfer of existing business onto the platform. It too has been shopping. It is acquiring BlackRock’s DC business which will move to the ARC platform and boost assets significantly.
“2015 was Anno Pensionis (the year of the pension) and since then there has been a marked rise in pension flows”, said Bella Caridade-Ferreira, CEO of Fundscape and author of the Platform Report. “Although the first quarter is traditionally the start of the ISA season, pension flows were four times stronger than ISA activity.”
ISA business was particularly subdued this quarter. Gross sales were down by 15% and net sales by 40% compared to the same quarter in 2015. Total net ISA sales were the lowest for a first quarter since 2012. In contrast, pension business maintained momentum with net flows up on the previous quarter and the same quarter in 2015.
“ISA activity is likely to improve modestly in the second quarter, but concerns around Brexit will suppress demand. It has had less of an impact on pension business. Investment activity is likely to be muted until the second half of the year and even longer if the UK votes for a Brexit. Platforms with a strong focus on retirement propositions will benefit the most this year”, 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 actual Q415 data and historical trends.