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UK model portfolio sales outstrip overall fund sales

Tatton Investments ranks as best-selling model provider for the period

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Sales of UK model portfolios comprised 53% of all investment sales in the second half of 2023, according to a new report from ISS Market Intelligence (ISS MI).

In its third annual UK Model Portfolio Sales Report, ISS MI highlighted a “significant” rise in model portfolio investment fund sales in the second half of the year, registering 11% growth. This compares with just 2% growth for the entire investment fund channel on a trailing six-month gross basis.

The report noted that advisers are increasingly insourcing their model portfolio needs, with insourced solutions accounting for 60% of sales.

However, at the same time there was also an expansion in outsourcing, with a 9% increase in the number of adviser firms using more than five model providers.

See also: Invesco launches discretionary model portfolio service

Based on six-month model gross sales, between 1 July 2023 to 1 January 2024, Tatton Investments took top spot in terms of the best-selling model provider. In second spot was Quilter, followed by Financial Express, LGT and Timeline Portfolios.

Passive funds also saw large gains, representing 37% of gross investment fund sales by the end of the fourth quarter, which was a 3% increase from the first half of the year.

Indeed, passive funds accounted for the majority of the 20 best-selling funds and were concentrated among a few fund managers.

This goes some way to explain why Vanguard Asset Management took first place in the best-selling fund managers for the second half of the year, beating BlackRock Investment Management into second and Legal & General Investment Management (LGIM) in third.

In addition to topping the model portfolio rankings, Tatton scored fourth spot in the best-selling fund groups, while Quilter Investors ranked fifth.

“2023 was another transformative year for the UK model portfolio market, with significant shifts in adviser preferences and the rise of passive funds,” said Benjamin Reed-Hurwitz, associate director, EMEA research at ISS MI.

“ISS MI’s data underscores the importance of agility and innovation for providers looking to thrive in this evolving landscape,” he added.

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