UK fund platforms saw a 50% jump in net sales over 12 months driven mainly by pension products.
Net funds sales on platforms in the second quarter (Q2) were £14.4 billion (€15.8 billion) – 50% up over the same quarter the year before, according to Fundscape, which compiles industry data.
Bella Caridade-Ferreira, chief executive of Fundscape, described the figure as “breath-taking” and put the buoyant figure down to the UK’s pension freedoms rules and the seasonal spike in tax-efficient Individual Savings Accounts.
The momentum came mainly from pension flows, which increased 31.2%.
“With the advent of pension freedoms, investors and their advisers are reorganising and consolidating pensions on one platform. As a result of high transfer values, defined benefit (DB) transfers into DB schemes are also a defining factor of the pension trend,” said Caridade-Ferreira.
Financial advisers have warned of risks associated with pension transfers and the UK regulator in June made recommendations due to concerns that people transferring products may be giving up protected benefits.
However, Caridade-Ferreira expects pensions to continue to drive the sales trend.
“Setting aside any Brexit-related slowdown and the impact of MiFID II and other regulations in the pipeline, we expect pension business to continue to drive strong platform activity in the mid-to-long term,” she said.
“As a result of the focus on pensions, future platform enhancements will be targeted at delivering the best possible retirement products coupled with the investment solutions to manage them.”
Hargreaves Lansdown and Cofunds along with Aegon, Standard Life and Aviva all had net sales of between £1 billion and almost £2 billion in Q2, including pensions and ISAs, according to the data.
Compared to the previous quarter of this year, net sales for the platform industry in Q2 revealed a 7% increase, a figure described as healthy.
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