Multi-asset fund sales soared to over £14bn in the first half of 2024, up 25% on the final six months of 2023 according to ISS Market Intelligence data.
UK-domiciled multi-asset funds also recorded positive net inflows for the first time in five quarters, recording £500m net sales in Q2.
Funds-of-funds led the way in terms of multi-asset sales, recording a six-month trailing growth rate of 33%.
By region, advice firms using multi asset products in Scotland and the North West registered growth of more than 30%. By contrast, the North East saw sales fall 9%.
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Benjamin Reed-Hurwitz, Emea research leader at ISS MI and lead author of the MPS Report, says: “It’s encouraging to see positive sales for multi-asset funds for the first time in five quarters. However, it’s still too early to call this a trend; at the very least we’ll need to see that replicated in the next quarter’s data to make that call.
“The previously speculated changes around capital gains tax could well explain why more investor money is being directed towards multi-asset funds, given their tax efficiency. If this was the case, then the recently confirmed tax changes should add strength to this trend.
“As a single fund made up of multiple underlying funds, multi-asset funds allow managers to make asset changes without triggering a CGT liability, unlike model portfolios.
“Still, net sales of just £100 m suggest there’s significant churn within the category, with capital largely flowing between fund groups instead of new cash being invested in these vehicles.”
According to ISS MI, ‘insourcing’ remains rare among firms in comparison to the model portfolio business, accounting for just 20% of gross sales in H1.
Some 62% of advice firms use five or more fund providers for their multi-asset offerings.
Reed-Hurwitz said this indicates that financial advisers continue to prefer a selection of ready-made, off-the-shelf investment solutions.
“Additionally, with most advisers relying on the services of five or more asset managers, it’s clear that they value the specialised expertise that each manager brings. This trend highlights a strong demand for diverse, expert-led options to meet a range of client needs.”
