Soaring D2C assets at AJ Bell have prompted a comparison with Hargreaves Lansdown, which is facing continued fallout from its cheerleading of Neil Woodford via its Wealth 50 best buy list.
AJ Bell’s platform assets under administration grew 16% to £44.9bn with D2C growing at more than double the rate of advised assets, according to its first full-year results since its IPO in December 2018.
In the D2C space AUA grew 28% to £11.1bn compared to growth of 13% in the advised space, which still has triple the assets of D2C at £33.8bn.
Liberum analyst Rahim Karim said the strength of D2C may prompt some investors to favour AJ Bell over Hargreaves Lansdown. But Karim questioned whether the level of outperformance could be sustained without additional investment in AJ Bell’s brand and technology.
Hargreaves took in £1.7bn of net new business in Q3 2019 to take AUA to £101.8bn. AUA had been £93.8bn a year earlier.
City analysts have issued downbeat forecasts for the platforms giant with Credit Suisse anticipating an “uptick in client departures” and JP Morgan Cazenove forecasting up to £7bn in outflows over the next couple of years.
Andy Bell touts ‘trustworthy’ business
AJ Bell chief executive Andy Bell (pictured) said investors were looking for “established, trustworthy businesses” amid unsettled markets and political uncertainty. Bell said investors are increasingly looking to take control of their savings with “flexible, low-cost, online solutions”.
His comments come as the implosion of Neil Woodford’s boutique fund house brings a dark cloud over the investment industry, which this week faced very public scrutiny from BBC Panorama.
Speaking to Portfolio Adviser before the wind-down of Woodford Equity Income was confirmed, Bell said he had the “utmost respect” for the UK equities manager and that people in the industry were too quick to “kick people when they’re down”.
Due to a price-to-earnings ratio of 41.4x and yield of 1.8%, Liberum reckoned AJ Bell looked expensive and could de-rate if it fails to deliver on guidance and forecasts. It reiterated its sell rating.
AJ Bell rallied by a third in its first day of trading last December prompting questions over whether it had been correctly priced. It was trading this morning at 378p.
Brooks assets inch up on defensive positioning
Brooks Macdonald assets under management are up 4.8% year-on-year to £13.3bn, according to its quarterly update, which also came out on Thursday.
The wealth manager said its defensive positioning meant investment performance was 1.6% over the period compared to 2% for the MSCI WMA Private Investor Balanced Index.
Net outflows of £28m meant AUM grew 1% over the quarter.
Funds and the model portfolio service were the only areas of the business with net inflows over period at £23m and £9m respectively.
Chief executive Caroline Connellan said: “Given the investment we are making in our talent and capabilities, the focus we maintain on efficiency, and our ongoing cost discipline, our expectations for full year profit are unchanged.”
