Active fund sales through model portfolios declined last year amid a wider drop in MPS sales.
Active funds bought through MPS dropped 17 per cent in 2022, according to ISS Market Intelligence’s UK MPS sales report.
The second half of last year also saw a 12 per cent drop in platform MPS sales among IFAs, with £22.5bn sold.
MPS sales peaked in the second quarter of the year, followed by a significant drop in the third quarter and recovering in the fourth quarter.
Of the new funds added by MPS providers, the top five best sellers were ESG funds, with three of these also index trackers.
ESG funds accounted for a quarter of all MPS gross sales in 2022.
Financial adviser firms with their headquarters in the North-East were the only IFAs to see MPS sales grow in the second half of the year, seeing fund sales rise 4 per cent compared to the first half of the year.
Best-selling MPS and fund managers in second half of 2022 (gross)
Model providers | Fund managers |
Quilter | Vanguard Asset Management |
Financial Express | BlackRock Investment Management |
Tatton Investment Management | Legal & General Investment Management |
EBI | Fidelity International |
7IM | Quilter Investors |
| | Royal London Asset Management |
| | HSBC Global Asset Management |
| | M&G Investments |
| | Schroders |
| | Waverton |
Source: ISS MI
The rise of MPS is still ongoing, and it remains to be seen how important they will become to retail fund flows, said Benjamin Reed-Hurwitz, EMEA research leader at ISS Market Intelligence.
“Being at the nexus of product and distribution, model portfolios incentivise advisory firms, fund managers, discretionary fund managers and platforms to capture adjacent revenue streams, thus embedding themselves deeper in the retail investment management value chain,” he said.
“Watching how financial adviser firms craft their model portfolio product shelves will be critical to answering fundamental questions of how many actors benefit from model portfolio adoption and who in the value chain holds the most pricing power.”
The report showed that Quilter, Financial Express and Tatton Investment Management were the top three best-selling model providers in the second half of 2022, with Vanguard and BlackRock the top fund managers.
Reed-Hurwitz said: “It is clear that model portfolio providers have spread the word far and wide, so that model portfolios are poised to become the predominant portfolio solution amongst UK advisers.”
sally.hickey@ft.com
