Purchases of investment companies on adviser platforms reached an all-time high of £1,298m in the 2021 calendar year, setting a new record, according to data compiled by ISS Financial Clarity for the Association of Investment Companies (AIC). This represents an increase of 23% on 2020 (£1,052m), which was the previous record.
In the fourth quarter of 2021, purchases amounted to £334m, the second highest quarterly total on record. The top quarter for purchases was the first quarter of 2021 (£384m).
Net demand for investment companies on adviser platforms (purchases minus sales) was £320 million in 2021, an increase of 29% on 2020. Investment companies have not seen a single quarter of net negative demand since records began in 2011.
The number of firms purchasing investment companies averaged 2,028 across the four quarters of 2021. This compares to an average of 1,516 firms using investment companies in 2020, a year-on-year increase of 34%.
Measured by purchases, the most popular sectors in 2021 were Global (with a 17% share of all purchases of investment companies on adviser platforms), Flexible Investment (8%), Infrastructure (6%), UK Equity Income (6%), Global Smaller Companies (4%) and UK Smaller Companies (4%).
In terms of net demand, the top sector in 2021 was Flexible Investment, followed by Property – UK Logistics, Infrastructure, Global Smaller Companies, Asia Pacific and Global.
In the fourth quarter of the year, the Property – UK Logistics sector saw the highest net demand. The VCT Generalist sector, which rarely features among the top sectors for net demand, jumped to fourth place.
Transact accounted for 45% of purchases in 2021, and 51% in the fourth quarter. Apart from Transact, the major platforms for investment company purchases are Raymond James, FundsNetwork, Ascentric, 7IM and Quilter Wealth Solutions. Together, these top six platforms account for 93% of investment company purchases.
Nick Britton, Head of Intermediary Communications at the Association of Investment Companies (AIC), said: “Advisers are clearly seeing many benefits in the investment company structure, whether it’s for core global equity exposure, consistent income or access to property and infrastructure. Last year set new records both for investment company purchases on adviser platforms, and the number of firms buying investment companies on those platforms.
“Our Flexible Investment sector, which is home to investment companies focused on multi-asset investing and capital preservation, saw particularly strong demand in a year that was marked by continuing uncertainty over the COVID-19 pandemic. It’s encouraging that venture capital trusts featured among the top sectors by net demand in the final quarter of the year, indicating growing interest in trading VCT shares on platforms.”