Financial advisers are expected to invest more in “smoothed” multi-asset funds over the next two years as a response to market uncertainty.
Over two-thirds of 109 UK advisers surveyed predicted the growth in these funds because they anticipate demand for funds that can cope with volatility.
Smoothed multi-asset funds attempt to remove some of the extreme short-term volatility of stock market returns.
The study, by Prudential, found that many advisers expected the pace of expansion in the ‘smoothed’ multi-asset area to speed up, though about 20% thought the area would stall or decline because these products are already widely recommended. Nearly a quarter of the advisers said they recommended them to client very regularly.
Advisers that don’t recommend them felt there was not enough competition among smoothed multi-asset funds and 30% of them were concerned about a perceived lack of choice of with-profits providers and about the same amount were concerned about transparency and the sector’s reputation.
The main objection was from advisers who prefered to offer their own risk-rated funds.
Paul Fidell, investment expert at Prudential, said: “The smoothed multi-asset investment sector is firmly established on a growth path and all the indications are that advisers expect that to continue or even accelerate.
“There remain concerns about a lack of competition in the sector but the old concerns about reputation appear to have receded although clearly existing providers have to ensure they continue to deliver for advisers and their clients.”
©2017 funds europe
