How was it for you?

How was it for you?

There was a visceral reaction to the Brexit vote in July. Respondents were negative… but much more positive about the second half of the year.

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We ran the sentiment survey for the first two weeks of August, and as it was the start of the long summer season, we expected a lower turnout overall.

There was a total of 76 responses, only marginally down on the previous month. Fund groups represented 54%, platforms 33% and distributors 5%. The 8% in other included life companies and banks.

Most respondents were UK‐based although 5% reported they were cross‐border or international. Presumably domestic European respondents were already on holiday…

Figures from the IA, the ABI, the Pridham Report and the Fundscape Platform report all point to a very volatile environment and a contraction in sales flows and this was reflected in the negative tone of the survey.

Type of respondents


Fund groups and platforms braced themselves for a tough July following the surprise Brexit result. Property funds were forced into extraordinary measures as commercial property prices took a hit, but other funds did well as investors jumped into defensive strategies. Surprisingly, the top answer was OK or Better than average with 31% of the vote each.

Interestingly, fund groups appear to have had a better time of it than platforms, despite outflows of £1.1bn in July (Source: Investment Association). Platforms were obviously in the negative camp.

July busines


So after July, and with the benefit of hindsight, did respondents feel any better about the first half of the year? Not really.

The first quarter was slow for stock‐market reasons. The second quarter for Brexit reasons. The combination was lethal. 40% of all respondents said it was worse than expected or terrible. Fund groups had a more torrid time than platforms with 38% saying it was worse or terrible compared to 29% saying that it was better or excellent.

H1 business


So looking ahead, and now that the after‐shocks have subsided, do respondents feel any better about the second half of the year? The answer is an emphatic yes. 67% of respondents believe the second half will be ok, better or excellent. If we strip out the OKs, 35% still think it will be better or excellent.

Fund groups were much more optimistic about H2, with 62% expecting it to be ok, better or excellent (when you’ve hit rock bottom, the only way is up). Platforms, however, were quite negative about the second half of the year. The question is, are they being overly cautious or eerily prescient?

h2 business


“Strong product offering across popular asset classes”

“Increasing opportunities to support advisers/platforms in delivering client investment solutions due to regulation and market uncertainties.   In terms of fund management the market is looking at alternatives which is core to our business!”

“Investors will have seen strong market performance, markedly against commentators’ predictions. We know there is a high weighting to cash and investors are looking to time market re-entry. Less volatility may encourage them back. Equally a market retrenchment will possibly spark investor interest as they take advantage of ‘cheap’ assets. True diversifiers will lead the way.”

“Tough to call.  Response of markets post Brexit has surprised on up side, but there’s still a huge degree of uncertainty and the lower for longer thesis driving equity markets could easily get destabilised.”

Not having Property or large exposure to UK equity funds has proved beneficial in July – combined with increased demand for our Absolute Return and Global Equity & Global Income funds. I remain sceptical as to whether we can continue this momentum though.”

“The uncertainty of Brexit will be exacerbated by the concerns over the US elections. Although markets have recovered strongly the full implications of both these issues is likely to dampen demand.”


“Expecting a more stable background in the UK due to increased confidence that the May govt will provide interesting stimulus measures and sensible rhetoric around actions for Brexit.   The US election likely to cause short term wobbles.”

“New business growth remains strong, because our position in and commitment to the adviser platform market remains clear and understood.  Whilst there is market uncertainty around Brexit and ramifications for the UK, advisers are successful at counselling their clients to stick to long term objectives, which means retention are strong.  These 2 factors combine to mean that we are still enjoying good net sales growth!”

“The impact of Brexit remains unpredictable and investor confidence could be easily dented as we await clarity.”

“Tough to call.  Response of markets post Brexit has surprised on up side, but there’s still a huge degree of uncertainty and the lower for longer thesis driving equity markets could easily get destabilised.”

Despite the FTSE approaching record highs, there is sure to be further volatility in the markets. Uncertainty remains, meaning no end to the wait and see approach of many investors.”

“Sentiment is getting better as markets are good and the post-Brexit fears recede. There is also a lot of activity behind the scenes especially as the two big players exit.”

“Post-brexit hangover.”


Having redeemed £3.5bn in June, retail investors pulled out a further £1.1bn in July.  Property funds were the worst hit with net outflows of £792m (Investment Association).

But sentiment has already begun to improve for fund groups — June and July had been some of the worst sales months on record, so it is no surprise that they expect the environment to improve  in H2 — when you hit rock bottom, the only way is up.

Platforms, on the other hand, seem to have a more cautious view of the second half of the year, which is a little surprising given their collective experience was not as bad as the fund group one. It may well be that fund groups are simply euphoric that they’ve got through the worst … time will tell.

Over and out.