NextWealth’s first report into the use of multi-asset funds has found that three quarters (75%) of financial advice professionals use multi-manager or multi-asset funds, with 28% expecting to increase their allocation of client assets to these products in the next three years.
The report, Multi-Asset Distribution Dynamics, looks in detail at how financial advice professionals use these products, offering valuable insights for asset managers and financial advice firms.
Heather Hopkins, Managing Director of NextWealth comments: “In May 2023, the Investment Association reported that 17% of UK retail funds were invested in mixed asset funds. In spite of the important position multi-asset funds have in the retail wealth market, little is known about how financial advisers use these products.
“With this report we have found that while multi-asset funds are widely used, they attract a smaller proportion of new client money compared to MPS or adviser managed models. Among a cohort of advisers (31%), they are the main solution used. Among the rest, they are used as appropriate to manage CGT concerns, for smaller client portfolios and to access specific investment objectives.”
The report includes:
- Multi-asset fund usage benchmarks
- How advisers use multi-asset funds in practice
- Clients with smaller portfolio values
- Tax management
- Access to a wider investment universe
- Balancing against assets held elsewhere
- Blending multi-asset funds and number blended
- Approach to blending multi-asset funds and reasons not to blend
- Blending multi-asset funds with MPS
- Multi-asset funds vs MPS
- Factors influencing choice of funds or portfolios
- Performance and ratings providers
- Price
- Adviser-turned-fund-manager
Heather Hopkins comments: “Our next report, to be published soon, looks at the discretionary MPS market. The two reports go hand in hand and show strong continued demand for discretionary MPS and strong pricing pressure. We think the direction of travel remains toward discretionary MPS and that’s what data bear out in this multi-asset report.”
