InvestmentsOct 14 2014

Adviser Rant: Lots of fund choice, but where’s the quality?

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Nucleus chief David Ferguson recently tweeted: “90,000 funds in Europe. How many of them are hopeless?” I think he makes a very good point.

Asset managers are sometimes slow to catch on to trends, but there is one you simply cannot ignore: the increase in market share of mixed-asset funds.

Since 2004, the net retail sales of mixed-asset funds has increased by just over 323 per cent (to 2013, according to IMA statistics) and if you were to combine just the sales into the 20-60% and the 40-85% Shares sectors, together they are the highest selling asset class for August.

Why has this happened?

I believe advisers have begun to recognise what it is that clients value about their service

I believe advisers have begun to recognise what it is that clients value about their service.

I don’t believe it is slaving over statistics to find the best performing UK equity fund; it is the value that they provide: advising clients to put money into a pension or setting up trusts to protect death benefits.

Asset managers want to be where the money is, so it is no surprise to learn there are 339 mixed-asset funds available for analysis. Meanwhile, many legacy funds are just left to die a slow and painful death and it is the clients that remain in those funds that suffer.

When does the FCA have a duty of care to step in and enforce consolidation?

In a world where we have so much information at our fingertips, only the best-of-breed products should survive.

Nathan Fryer is director at Plan Works