An ISA surpriser – D2C market strong in Q124

D2C platform market had good growth in the first quarter of 2024.

An ISA surpriser – D2C market strong in Q124

It was a blistering start to the year. Markets soared in the first three months of the year, with the S&P500 up 10% (more than its growth in 2023). The FTSE All World was also up by 7.6%. As a result, D2C platform assets rose by almost £19bn to £338bn. Markets were just part of the story. Gross sales surged to £13.5bn as consumer confidence finally started to improve, eclipsing even the post-covid boom period to deliver the highest gross sales since Fundscape records began in 2020. The ISA season helped of course, but it wasn’t the only factor. Net flows of £5.2bn were surprisingly buoyant – more than three times higher than the previous quarter, and the highest volume in two years. After several quarters in the low 20s, the net-to-gross sales ratio rose to a more palatable 39%.

In terms of assets, Hargreaves Lansdown and interactive investor are the largest platforms by a clear margin, so they always stand to benefit the most from rising markets. In a repeat of last quarter, Vanguard recorded the highest net flows in the market and third place for gross sales, outperforming much larger platforms. The simplicity of its pricing and proposition resonates with UK investors during the good times and the bad.

Martin Barnett, Head of Content at Fundscape, said, “It’s a well-known trope in retail investments that the ISA season sets the tone for the rest of the year. This is particularly so with poor ISA seasons, which inevitably herald lacklustre years and muted flows. But this year’s ISA season turned out to be a barnstormer – breaking all records for gross flows and posting the best net flows since 2021.”

Volatility has not gone away and any of the numerous geopolitical events in the headlines could crush burgeoning positive sentiment. The prospect of interest rate cuts seems to be subsiding, and commentators are now predicting only one cut later in the year. While rates remain high, cash and cash-like solutions will compete with the D2C market. Platforms will need to work hard to maintain the quarter’s momentum into the early-bird ISA season, and beyond, if the D2C market is to return to the levels last seen in 2022.

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Notes to Editors:

The Direct Matters report covers the direct market and is published by Fundscape. It has been running since Q121. For further information or background please contact:

  1. Active Savings and the advised portion of HL’s business have been excluded.
  2. interactive investor’s gross sales have been estimated.

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