Last year, the Gatekeepers report caused a stir in the industry by being the first to shine a light on potential biases in fund ratings. This year’s edition is bigger, better and bolder with a wealth of practical information to help fund managers navigate this challenging post MS15/2.3 market. As well as re-assessing the gatekeeper market, we’ve taken a closer look at the efficacy of active fund management, sorted the really active wheat from the closet-tracking chaff, and looked at the value chain from a regulatory perspective and the potential for further scrutiny and investigation.
A long and sultry summer of sports and social events used to distract the haut monde from investments and led to the old adage of 'Sell in May and go away, come back on St Leger's Day'. Whether stock markets underperform during the six-month period has never been conclusively proven, but respondents to our May survey were undoubtedly more cautious on the outlook for the second quarter. But it's Brexit and not tennis is overshadowing proceedings.
According to the Investment Association, the top sectors of 2015, by net sales, were UK Equity Income, Targeted Absolute Return and Europe ex-UK. Fund groups lucky enough to have funds in these sectors will have had a good year, and if their funds were on any shortlists, they probably had a great year. How much impact does being selected by a gatekeeper have on a fund's fortunes? We ran our gatekeepers analysis to find out which funds had performed best and whether there was any correlation between performance and the number of selections they had attracted. All of the funds shown below are ranked on their three-year returns. The tables below include a mix of the best funds by performance and the funds with the most gatekeeper selections. The ones with the most gatekeepers usually attract the most flows.
The Fundscape Gatekeepers study has attracted a lot of attention. The launch events were exceptionally well attended by fund groups and advisers, and the feedback was emphatically positive. Among the gatekeeper cohort, however, the reception was slightly mixed. Some got in touch to check we’d analysed their lists and sent us their selections. Most kept their distance, but one or two went on the attack, criticising the quality of the research.
The gatekeepers who went on the attack have neither read the report nor seen the analysis. I’ll repeat that again — they have neither read the report nor seen the analysis — which we found amusing and bemusing in equal measure. You see, we got in touch with them and offered them a full demonstration and explanation of our analysis, but they turned us down, so everything they say and write is based on misconceptions, flawed assumptions and conclusions...
Gideon Osborne always likes to pull a few crowd-pleasers out of his red box on budget day. Last year it was pension freedom (anno pensionis TM) and the personal savings allowance, this year it was the introduction of the LISA (lifetime ISA) and the significant rise in the NISA allowance (new combined ISA). In light of these changes, we’ve had a few requests asking us to set out how product trends might change over the next five years.
Last Wednesday 2nd March, at a breakfast briefing hosted by Schroders, we launched the Gatekeepers report to a packed room of senior figures from the fund management industry. We were overwhelmed by the turnout — of the 50 groups that were invited to attend, 48 attended and demand has been such that we're holding a second event on 30th March (if you'd like to be come, let us know).
We’re in an extended lock-down phase until various PLCs have reported their annual results to the stock exchange. The Platform Report should be published in full on or around 18th March 2016. In the meantime, although we can’t give you any detail, we can provide you with some high-level platform numbers to keep you going:
As the New Year dawns, there are three obsessions in the UK: resolutions, January sales, and an increasingly popular trend is Dry January — a chance to give our livers a break after the Christmas season. So here's our take on all three.
New Year Resolutions
One of the things that we often berate ourselves about is that we don’t communicate regularly enough, so one of Fundscape’s resolutions is to stay in touch and blog at least once or twice a month. And we may even stretch to weekly blogs if we have anything interesting or exciting to tell you about.
The trend for outsourcing investment has grown sharply in recent years, and with the advent of pension freedom it is only going to get bigger. Model portfolios and robo-advice are currently the talk of the town, but in the background funds of funds have been hoovering up assets.
According to Fundscape’s latest report Deconstructing the UK Funds of Funds World, FOF assets may only represent 12% of the total fund industry AUM (June 2015), but they punched well above their weight with 52% of industry sales in H1 2015. So in short, it pays to be part of this expanding market.
Here are a few snippets from the Q215 data to keep you going until the report comes out in August.
Following demand from other platforms, this quarter we have added Aegon to the platform universe. Aegon does not provide data to Fundscape but releases quarterly results with sufficient information (assets under administration and gross/net flows) to be included on a quarterly basis. We estimate breakdowns, and because its quarterly results come out after our publishing date, we estimate the current quarter and provide actuals for the previous quarter (as we do with Hargreaves Lansdown).
How has the platform industry performed in the first quarter of the year? With the UK getting ready for pension freedom and the general election, financial services were under considerable strain. Because of reporting restrictions, our full report will not be published until mid May, but to tide you over until then, we have a few headline numbers to share with you:
Fundscape and the Pridham Report have jointly published the Definitive Guide to the UK Fund Industry 2015, covering all aspects from fund manufacture to distribution.
Despite predictions to the contrary, two years after the Retail Distribution Review (RDR) was introduced, the UK’s fund industry is flourishing. It is now the largest domestic market in the Europe with assets of £753bn, and is larger than the domestic fund markets of Switzerland, Germany, France and Italy.
Further expansion is predicted. Low interest rates, the rising number of baby boomers and the pension freedom that comes into force in April will help to fuel growth. Five-year projections with pessimistic, realistic and optimistic scenarios have been produced in the guide. Bella Caridade-Ferreira, CEO of Fundscape said “UK fund industry assets will skyrocket on the back of this unique combination of factors. Our realistic scenario sees assets rise to £1,449bn by 2019, a compound annual growth rate of 12.8%. In the optimistic scenario, 2019 assets could be in the region of £1,773n. Or even higher.”