Advisers are ramping up their exposures to multi-asset funds in the run-up to April’s pensions freedoms, according to a new survey.
A poll of 114 intermediaries, undertaken in December 2014 by Barings Asset Management, found that nearly half of the respondents were encouraging their clients to invest in multi-asset funds.
While 30 per cent of intermediaries had said they were advising their clients to move into multi-asset growth funds in the previous survey in the first quarter of 2014, that figure grew to 46 per cent in the latest survey.
For the first time in the history of its annual survey, Barings also asked advisers specifically about multi-asset income funds and found similar positive sentiment.
The proportion of intermediaries who said they would be advising clients to move into multi-asset income funds in the next 12 months was 41 per cent.
There was also an overwhelmingly favourable response to multi-asset income funds, with 24 per cent of respondents saying they had a “very favourable” view of such funds and 70 per cent professing a “favourable” opinion.
Rod Aldridge, head of UK wholesale distribution at Barings, said: “In light of significant UK pension reforms, we believe there will be an increasing need for products that are designed to provide a regular income while minimising risk.
“Multi-asset products can fit this market very effectively.”
The survey results will give a lift to the large number of asset and wealth managers that have launched multi-asset income products in the past year.
The vehicles have been launched in order to tap into an expected rise in demand for multi-asset income funds. From April, retirees will no longer be obliged to take out annuities.
Although many people are expected to take control of their pension money rather than buy an annuity, it is anticipated that many will also invest in products that will generate an annuity-like return with regular income.
But many advisers that have spoken to Investment Adviser expressed scepticism towards the swathe of new products launched recently, saying the industry was already awash with mediocre funds.
And data from FE Analytics has shown the vast majority of multi-asset funds available to retail investors with a track record of at least 12 months currently provide an annual income of less than 4 per cent.
