Big platforms hold firm in trusts debate

Is it demand for investment trusts that should drive the big three platforms to add them, or do they need to add them to increase demand?

The big three – Cofunds, Skandia and FundsNetwork – have said they have no plans to add the closed-end vehicles any time soon, so the debate will keep rolling for some time to come.

Klare Baldwin, head of marketing for FundsNetwork, told Investment Adviser that trusts are not being included, and plans to offer them are on hold. She cited a lack of demand and other priorities.

“Investment trusts do not fit our current delivery roadmap,” she said. “Against the backdrop of regulatory changes, we were not able to achieve that. We are in the process of looking ... but we have no date for investment trusts.”

Skandia has taken a similar view, saying it currently has no plans to add the closed-end vehicle this year.

“We are constantly reviewing the investment options on the platform, in line with demand for them compared to other investment solutions, but we do not have any immediate plans to introduce investment trusts,” adds a spokesperson.

Cofunds, the UK’s largest independent platform, refused to say when investment trusts will be added. A spokesperson says it has not seen the demand from platforms users.

In fact, it is not clear if these platforms will add investment trusts at all. All three have cited a lack of demand, and, if the observations of the investment trust trade body are correct, they may not need to – advisers are increasingly using more than one platform to meet their clients’ needs.

The stance of the big three contrasts with that of the smaller platforms and wraps, most of which have already offered investment trusts for some time.

Wrap platform Transact has included investment trusts since its launch 12 years ago, while they have been available on the Nucleus wrap since the start of 2007.

Simon Elliott, investment trust analyst at Winterfloods Security, says it is “disappointing” the three big platforms refuse to offer investment trusts. He suggests the availability of trusts is likely to grow when “technological hurdles” are overcome, although he notes that the timetable for this remains unclear.

Stephen Peters, investment trust analyst at Charles Stanley, says it is a “shame” the large platforms have opted against adding the trusts. “That was really where there was potential for future growth for the sector,” he says, adding that fund management groups should do more to get their investment trusts on the big three.

However, having spoken to advisers at its training roadshows, Ian Sayers, director general of the Association of Investment Companies, (AIC), the closed-end industry trade body, admits that advisers are, in practice, using multiple platforms to access the vehicles.

While the big three see little demand, the AIC says it is training more advisers on investment trusts. More than 500 advisers were trained in the first two months of this year, compared with roughly 800 in the whole of 2012.

Cofunds, FundsNetwork and Skandia say they will add investment trusts when there is demand from advisers. Yet, it is claimed that advisers are using more than one platform to fulfil their needs anyway.

If this is the case, the big three may be in no rush to add investment trusts.

Rebecca Clancy is a freelance journalist

Platforms

The big three

COFUNDS

• Established in 2001

• Accounts for approximately 22 per cent of the UK platform market

• Assets under administration totalled more than £50bn at January 9 2013

• Chief executive is Martin Davis, previously chief executive at Openwork

• Largest shareholder is Legal & General, which holds a 25 per cent stake in the business. On March 26, it announced a deal to secure the remaining 75 per cent share for a consideration of £131m, with the acquisition expected to be completed in the first half of 2013

Source: Cofunds

Funds network

• Established in June 2000

• Assets under administration of roughly £40bn at December 31 2012

• Owned by Fidelity Worldwide Investment

• UK managing director is Hugh Mullan

• Other senior people include Pat Shea, head of FundsNetwork, Klare Baldwin, head of marketing, and Paul Richards, head of sales

Source: Fidelity

Skandia

• Selestia Investment Solutions changed name to Skandia Investment Solutions in 2009, completing the migration of clients from Skandia MultiFunds, a fund supermarket launched in 1995

• Platform assets under administration totalled £41.7bn at December 31 2012

• Has roughly 20 per cent share of UK platform market

• Skandia and its platform is part of Old Mutual Wealth, which is part of Old Mutual Group

• Paul Feeney is the chief executive of Old Mutual Wealth.

Other key personnel include Peter Mann, managing director UK at Skandia, and Steve Powell, sales director for the UK

Source: Skandia