Platforms  

Advisers demand broader platform investment choice

Mutual funds dominated platform sales in the last quarter of 2013 accounting for more than 90 per cent of gross investments despite increasing demand from advisers for alternative investment vehicles, research from The Platforum has shown.


Investment Assets

% of Q4 13 gross sales

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OEIC

61.5%

Unit Trust (UT)

28.7%

Unclassified

5.2%

SICAV

1.6%

Exchange Traded Fund

0.9%

Company Share

0.8%

Cash

0.6%

Investment Trust

0.5%

Other

0.1%

Structured Product

0.1%

Venture Capital Trust (VCT)

<0.1%

Source: Matrix Solutions/The Platforum

By contrast, exchange-traded funds (ETFs) only took a 0.9 per cent slice of sales in the same period, and sales of investment trusts (ITs) also floundered, at 0.5 per cent of total sales.

However, the research showed there is a growing desire for greater portfolio diversity among advisers. In its most recent survey, one-third of advisers said they expect to pick out ITs for clients this year.

One-third also saw a place for ETFs in client portfolios this year, while 20 per cent had the same view of venture capital trusts (VCTs). However, 56 per cent said most clients would be put in traditional mutual funds.

The Platforum has said three big players do not offer ITs: Cofunds, FundsNetwork and Skandia. Eight do not offer VCTs: Aviva, Cofunds, Axa Elevate, FundsNetwork, Parmenion, Skandia, True Potential and Zurich.

Freddie Findlater, head of adviser platforms at The Platforum, said advisers expect platforms to offer a full investment suite post-RDR.

Robin Keyte, director of Somerset-based Keyte Chartered Financial Planners, said: “We would not necessarily use ITs or VCTs for more cautious clients and they generally perform better when markets are going up.”

Industry response

Phil Ralli, head of platform proposition at Aviva, said: “Our platform is targeted at the needs of mid-market clients, and feedback from advisers is that they do not typically use these more esoteric investments for such clients.”

Nicola Robinson, corporate communications manager at Parmenion, said: “We are not trying to provide trading infrastructure for advisers through our in-house proposition. VCTs are a bespoke solution sold on an individual basis at the discretion of an adviser.”

A spokesman for Zurich said: “While we have not seen significant demand for investment trusts so far, momentum is definitely building.”

David Thompson, managing director of Axa Wealth Elevate, said: “We offer a range of Investment Trusts, ETFs and other stocks and shares through stockbroking partner Winterflood. VCTs are considered complex investments by the FCA.”

Stephen Wynne-Jones, head of marketing at Cofunds, said: “An increasing number of clients say they’d like less mainstream investments on Cofunds, but they are still in the minority.”

FundsNetwork, Skandia and True Potential did not respond to requests for comment.