Fixed Income  

Advisers using Quilter platform turn to ‘safe haven’ assets

Advisers using Quilter platform turn to ‘safe haven’ assets

Advisers using the Old Mutual Wealth platform continued to increase exposure to less volatile assets in the third quarter of 2020, shifting away from the stock market and towards fixed interest products.

Data from Quilter, seen by FTAdviser, showed quarterly flows into the international fixed income sector rose by 101 per cent for the three months to September while UK fixed income rose by 49 per cent.

Both bond sectors had now seen at least two consecutive quarters of growth, the figures showed.

Fixed income buoyed at the expense of global equities. All equity regions, except European, saw either a switch to outflows or outflows widen.

The Far East was the least popular, with exposure decreasing by 53 per cent in Q3, while the US suffered a 40 per cent decrease as advisers appeared cautious to allocate to already well-recovered markets.

Quilter's Old Mutual Wealth platform is one of the largest adviser platforms in the market, with £57bn in assets and used by more than 7,500 advice firms.

Advisers using the Old Mutual Wealth Platform seemed more optimistic about other markets, but also reduced their inflows to emerging markets, UK equity and global funds by 23, 20 and 19 per cent respectively.

However, the sector which saw the biggest increase in inflows was ‘managed’ funds — multi-asset or multi-manager funds.

SectorQ1Q2Q3YTD
Managed70.50%63.10%165.00%83.10%
International Fixed Interest-9.10%29.60%101.00%27.40%
UK Fixed Interest-36.20%11.10%48.90%0.10%
European-13.80%-0.20%3.00%-4.70%
Japan-6.10%4.40%-0.80%-0.30%
Property-12.10%-5.40%-15.20%-9.50%
Global Specialist-40.40%14.80%-19.10%-11.30%
UK Equity32.00%0.50%-19.50%8.70%
Emerging Markets-2.60%3.50%-22.80%-3.20%
North American-11.20%-6.70%-39.50%-13.90%
Cash/Money138.10%-15.20%-48.00%35.80%
Far East-9.20%0.30%-53.00%-12.20%

The figures are representative of wider trends in the market. In July, Investment Association figures showed investors fled to bonds to the tune of £1.8bn in a sign strong stock market rallies had caused equities to seem “detached from reality”.

It followed £1.9bn and £1.2bn of net inflows into the asset class in May and June respectively.

Fixed income is seen as a relatively ‘safe haven’ asset, immune from the downturn equities could face if the so-called economic reality catches up with the market.

Andy Miller, investment specialist at Quilter, said: “There is a huge amount of uncertainty out there in the market just now as we approach a crucial point of the year. 

“Covid-19 has become part and parcel of our lives, but with cases rising once more and uncertain events on the horizon, we could see the road get bumpy once more.”

Mr Miller said advisers and their clients seemed “acutely aware” that the stock market recovery could “turn in an instant”.

With the US presidential election and the UK’s Brexit debate having the potential to upset markets and be a trigger for a fresh bout of volatility, he said it was “prudent to be adding some ballast” to portfolios.

Mr Miller added: “Furthermore, this is not a flight to cash like we saw in March. Instead advisers are ensuring their clients are invested in markets for the long-term and don’t risk missing out on the best days.”

The second phase of Quilter’s platform migration has faced delays recently, with the long-awaited switch originally set to summer 2020 now not planned until the end of November.

The advice giant has put the process on hold as advisers battle to navigate the uncertainties of the coronavirus pandemic.