It’s been a tough year for fund groups and platforms alike with Brexit and other worries cooling the markets. Initially, platforms were cushioned from the worst by ongoing DB transfer business, but by the second half of the year that business was also drying up. Year-on-year asset growth was a meagre 4%, while gross and net sales have plummeted. The economics are relatively unchanged, but investors have been spooked by Brexit and US-China trade wars.
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The PLATFORM INDUSTRY is in extended lockdown phase because several platforms will not report their full-year results to the stock market until mid-March, a full month after the usual scheduled publication date of the Fundscape Platform Report. As a result, Fundscape is releasing headline figures and industry highlights for 2017. The full report will be released in March once all PLC-owned platforms have published their results.
An extensive analysis of fund shortlists found that the quality of research varies greatly from list to list, and so it pays for advisers and consumers to be more selective about fund selectors. The independent study by Fundscape and gbi2 analysed 36 gatekeepers in four different categories of fund selectors: D2C buy-lists, adviser buy-lists, rating agencies and off-platform lists.
These gatekeepers influence a significant proportion of fund flows and as a result, have the potential to make or break funds whose success in gathering assets may depend on being selected by one or more fund selectors.
Owing to geopolitical uncertainty, the first quarter of 2014 was more volatile for investment growth, but platforms swam against the tide thanks to strong sales. In the first three months of the year, the stock market contracted by 3%. Platforms are inevitably affected by market movements, but instead of shrinking, total platform assets actually increased by 3.3% to £304bn over the quarter.
After months, if not years of rumour, L&G has finally acquired the Cofunds platform. The insurance company was one of six shareholders that first came together to challenge Fidelity in the supermarket world more than 12 years ago. Since then, Cofunds has grown to assets of more than £50bn and is the leading platform in the market by AUA. It grew and became part of the established platform industry, losing its newcomer, cutting-edge status in the process. Which may well be why the other five stakeholders were willing to sell to L&G — that and the fact that running a platform business is very expensive.
Fundscape's Q3 Distribution Report has just been published. Overall, it was a difficult third quarter for fund distribution. Gross sales totalled £22.1bn and were down 5% in the previous quarter and also in the same period in 2011. but highlighting the lack of sticky business was the fact that net sales fell 41% to £2bn. The press release is available here.
The usual flurry of ISA business at the beginning of the tax year gave fund sales a welcome boost in the second quarter. Net retail sales reached their highest level for a year. Managers with the right sort of funds benefitted. Meanwhile the trend towards more investment outsourcing by financial advisers continued. To see the rest of this press release click here.