Platforms  

Fundsnetwork set to break ranks over trusts

Fidelity’s Fundsnetwork could become the first of the big three adviser ‘fund supermarkets’ to break ranks and open up to third party investment trusts, after it revealed to FTAdviser it is lining up plans to include closed-ended funds.

The platform, which houses close to £49bn in assets, had shelved plans to broaden its offering to include trusts in 2013 citing a lack of demand, though it has continued to offer investment into five in-house Fidelity trusts.

This will be “enhanced” to include a range of funds from other providers, but the firm is still unable to confirm a timeframe for the changes.

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A spokesperson told FTAdviser: “Investment trusts form an important part of the planning and investment process for advisers.

“As part of our multiyear, multimillion pound investment into the UK business we are significantly enhancing our platform capability, which will include the addition of investment trusts from other providers. The timings of this are still to be confirmed.”

When Fundsnetwork postponed plans to include trusts in February 2013, it cited the demands of preparing for regulation changes on platforms, which were announced two months later and reach a climax with the ban on legacy cash rebates in April 2016.

Cofunds and Skandia, which administer £65bn and £30bn respectively, have also yet to include investment trusts on their platform, despite evidence demand is beginning to grow.

Bill Vasilieff, chief executive of wrap operator Novia Financial, cited major rivals’ inability to offer investment trusts, in spite of the RDR forcing independent advisers to offer advice on them, as an example of how the largest platform groups have failed to keep pace with the market.

He said: “They’ve [the old fund supermarkets] got to address it otherwise they are not providing a platform that’s fit for purpose, that’s a fact, for IFAs, and they will try and confuse you and bluff you but that is fundamentally true.”

Eight platforms - Transact, Nucleus, Ascentric, Raymond James Investment Services, Elevate, James Hay Partnership, Zurich and Novia - do offer investment company access for advisers.

Mr Vasilieff added that the platforms would say that there is no demand for investment trusts as a reason for not having them on the platform.

He said: “What they’ll say all the time is that IFAs don’t want them and a lot of IFAs don’t understand them, say they are too complicated for retail customers and will get away with it unless someone really raises the issue.”

“They are obliged [to have investment trusts on their platform]and without it they are not fit for purpose.”

Recent data published by the Association of Investment Companies showed that appetite for investment trusts has increased by 29 per cent in the second quarter of this year compared with the same period in 2013.

Purchases of investment companies in the second quarter reached a record high of £120.9m, compared with £93.7m in the same period last year.

These numbers are still dwarfed, however, by the sums invested in open-ended alternatives, which has prompted some to suggest that advisers have not changed their outlook significantly since the advent of RDR.