Record number of firms purchase investment companies via advice platforms

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The number of firms that bought investment companies via adviser platforms in the third quarter of 2021 was 2,157, up from 1,983 in the previous quarter.

The previous record, from the third quarter of 2016, was 2,014 firms. At this time demand for the structure was high following the gating of several open-ended property funds.

Nick Britton, head of intermediary communications at the AIC, said: “Since the Retail Distribution Review we have seen an upward trend in the number of firms buying investment companies on adviser platforms – from around 600 in 2012 to over 2,000 in these latest figures.

“The rising popularity of investment companies with advisers and wealth managers shows growing appreciation of their structural advantages, from the ability to deliver consistent income to their flexibility in accessing property, infrastructure and other alternative assets.”

However, despite this increase the overall share ownership of advice platforms remains low. According to research from Warhorse Partners, which analysed the shareholder register of 221 trusts at the end of 2020, adviser platforms made up less than 3% of the overall AUM.

Warhorse Partners’ research does have a skew towards conventional equity trust which may overstate some trends within its reports.

Q3 trends

In the first nine months of 2021 there was a total of £968m of investment companies purchased through the platforms compared to £754m for the same period of the year before.

The most-purchased investment company sectors in Q3, according to the Matrix Financial Clarity research, were Global (17% of purchases), Flexible Investment (11%), Infrastructure (7%), UK Equity Income (6%) and Asia Pacific (4%). This puts Asia Pacific in fifth place for purchases, its best ranking for the past three years.

Transact continues to be the dominant adviser platform for investment company purchases, accounting for 42% of all purchases in Q3.