Purchases of investment companies on adviser platforms soared 22% in the first three months of 2021 to reach a record high.
Data published by the Association of Investment Companies (AIC) showed purchases totalled £368 million in the first quarter, up from £301 million in the final quarter of 2020.
The figure also marks a 35% rise on the first quarter of 2020, when purchases reached £273 million.
The number of firms buying investment companies between January and March this year was 1,882, including 1,730 financial advice firms and 51 wealth managers. It was the highest number since the spike seen in the third quarter of 2016 which followed the EU referendum and the suspension of several open-ended property funds.
Nick Britton, head of intermediary communications at the AIC said demand for investment companies via adviser platforms began to recover towards the end of 2020, with this trend continuing into the first quarter.
Britton said: “The number of firms using investment companies is the highest it’s been since 2016 and if you exclude the spike in the third quarter of that year when several open-ended property funds were suspended it’s the highest ever.
“The most popular sectors include a mix of equity and alternatives such as property and infrastructure, demonstrating that advisers are seeing a broad range of benefits in the investment company structure.”
The AIC said the most popular sectors for adviser platform purchases in the first quarter were Global, accounting for 18% of purchases, UK Equity Income with 7% and Global Smaller Companies and Infrastructure, which both accounted for 6% each.
Meanwhile, Flexible Investment and Property UK Commercial each made up 5% of purchases.
However, the AIC said looking at net demand the most popular sector was Commodities and Natural Resources, with concerns about inflation prompting advisers and wealth managers to increase their clients’ exposure.
The second most favoured sector by net demand was Global Smaller Companies, followed by Infrastructure, Global Equity Income and Asia Pacific.
The UK Equity Income sector also returned to positive net demand in the first three months of this year, following three consecutive quarters of net selling on adviser platforms. In 2020, 91% of UK Equity Income investment companies either increased or maintained their dividends, compared to just 4% of open-ended funds in the equivalent IA sector.
