Investment companies reported a strong level of demand in Q2 despite the volatile market environment, according to the Association of Investment Companies.
Purchases of investment firms amounted to £700 million in HY1 across the sector, representing the highest figure on record.
“The healthy level of demand for investment companies during some difficult months in the market shows that advisers and wealth managers are taking a long-term perspective,” said Association of Investment Companies head of intermediary communications Nick Britton.
“Historically, market downturns have been great times to buy investment companies, though that’s not to say things won’t get worse before they get better.”
Advisor platforms logged £361 million in purchases, representing a 20% growth year-on-year and the second-highest quarterly figure ever recorded.
Net demand earned a further silver medal record at £151 million for the industry.
Market volatility showed its impact on the flexible investment sector as demand surged, accounting for more than any other AIC sector with 17% of purchases.
Flexible investments stole the crown from previous sector victor Global, which held the winning spot for purchases over the past 20 quarters. Global dropped to second place with 13% of overall purchases.
“It’s noteworthy that the Flexible Investment sector proved so popular last quarter. This sector contains investment companies that can invest in a range of assets, including a few well known ‘capital preservation’ mandates,” said Briton.
“It doesn’t take too much imagination to guess why these might have been popular this year.”
Smaller companies gained ground over Q2 with 7% of purchases, while UK commercial property gained 6%, UK equity income won 5% and infrastructure secured 5% of the investment pie.
“[A] strong showing for sectors trading on wider-than-usual discounts, such as UK Smaller Companies, suggests that some buyers may have been shopping for bargains,” said Briton.
“The resilient demand for investment companies in the second quarter of the year bucked a broader decline in total platform purchases.”
“Purchases of all products on adviser platforms fell to £48.93bn in Q2, 5% lower than the same quarter last year.”
