Multi-asset funds most popular choice with advisers
For adviser use only
We are always keen to understand how advisers manage investment portfolios, so I was particularly interested to see the results of our latest adviser survey. Two aspects strike me:
- Multi-asset funds are the most used investment strategy with advisers.
- Their use is prevalent among clients with less than £100K and very limited among high net worth investors.
Our survey finds that, in aggregate, 29% of client assets are invested in multi-asset funds, significantly higher than all other investment models.*
Digging below the headlines, advisers segment their book using multi-asset/multi-manager funds for their mass affluent clients and creating bespoke portfolios for wealthier investors. For clients with under £50K, 52% of advisers use multi-asset / multi-manager funds. This percentage falls to 7% for high net worth clients with more than £250K where the most popular strategy is individually designed portfolios (39%)**.
We see a few simple factors driving adviser demand for multi-asset funds:-
- They offer a cost-effective route to meeting mainstream client needs.
- The majority of multi-asset funds operate within tightly controlled mandates, limiting downside risk, which is more important for most advisers than out-performance.
- Advisers increasingly experience elevated governance responsibilities for managing in-house portfolios, coupled with the admin burden required to gain client consent for investment changes.
- Multi-asset funds manage away such burdens and release more time for client service.
Aegon and Cofunds are seeing rising use of multi-asset funds, a trend which is likely to strengthen during 2017-18.
*Opinion Research, Adviser Confidence Index, based on a sample of 252 IFAs. June 2017. Response to question ‘Approximately, what proportion of the assets you invest are placed in the following types of investment strategy?’
**Retail Wealth Study – 2016-2017. NMG Consulting. Published July 2017 and based on a sample of 312 advisers. Fieldwork conducted between 19th October and 2nd November 2016.