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Outsourced investment grows over in-house managed portfolios

23 April 2018

A growing number of advisers are outsourcing investment management, new research by Aegon has found.

According to the data, multi-asset funds and model portfolios built using external knowledge now account for over 55% of assets.

The most popular form of outsourcing is use of multi-asset funds, favoured by 29% of those who outsource, up from 18% in 2016. The research showed 12% of advisers use DFM portfolios, while single strategy funds were the preferred choice for 16% of advisers.

Whilst overall model portfolios remain popular with advisers, Aegon said the trend for in-house model portfolios has declined in popularity with a significant number of advisers preferring to delegate asset allocation and fund selection to specialist investment managers.

Advisers assessing a fund’s quality cited a robust investment process (22%), investment strategy and ethos (22%) and past performance as the most important factors to consider.

Nick Dixon, investment director, Aegon, commented:  “We’ve seen a clear increase in advisers’ use of outsourced investment management. This reduces adviser business risk and creates greater capacity for them to focus on client relationships and financial planning.

“Furthermore. advisers’ increasing use of multi-asset funds and decreasing use of model portfolios reflects a trend towards simpler solutions for clients, with lower costs, aligned with the FCA’s increasing focus on value for money.”

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