The trading environment in the second quarter provided no respite from the headwinds that have been pummelling the direct platform market. Platforms have been helped by modest market gains, meaning the majority were able to post positive asset growth. Gross flows were a comfortable £11.4bn for the quarter, but the all-important net figure was in the doldrums at £3.9bn as investors adjusted to higher living costs and prioritised cash products.
Rampant inflation, fuel price increases, national insurance hikes and the cost-of-living crisis took an inevitable toll on investor sentiment and market prices – and that was before Russia invaded Ukraine. As a result, the FTSE All World was down 6% for the quarter, sending direct assets below £300bn once again (to £297bn).
The Brexit brouhaha, geopolitical concerns and the Woodford fallout all conspired to make 2019 a tough year for fund groups. Thankfully it ended on a high with sales surging in December after the government’s election victory and the end of political uncertainty. As a result, gross fund sales via platforms in the last quarter rose to £34bn and net sales £9bn, bringing yearly totals to £112bn and £36bn respectively.
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In a year overshadowed by political uncertainty, it is no surprise that investors sat on the side-lines waiting for the storm clouds to clear. But after three quarters of sluggish activity, sentiment improved and net sales rose to £10.5bn in the fourth quarter, the highest since Q415. However, it was not enough to correct the balance — annual net sales of £38bn were down 16% on the £45bn in 2015 and few platforms were able to improve on their 2015 figures.