LONDON (September 27, 2023) – ISS Market Intelligence (ISS MI), a unit of Institutional Shareholder Services and a leading global provider of data, analytics, insights, media, and events solutions to the global financial services industry, today announced the publication of its second U.K. Model Portfolio Report, an examination of trends and developments shaping the U.K. model portfolio market in the first half of 2023. The report suggests that 2023 has witnessed a renewed opportunity set for model portfolio solution providers as investment fund gross sales in the financial adviser channel have bounced back from their lows of the third quarter of 2022.
The report found that model portfolio investment fund gross sales grew by 13 percent over the first six months of 2023, outpacing overall sales growth in the funds channel. Driving the growth was greater adoption of models by those firms already using models in some capacity. While financial adviser firms using model portfolios accounted for about 90 percent of the channel’s gross sales, their share of sales going towards these programs increased by 3 percent over the period, topping out at 57 percent.
The report further highlights that when it comes to model portfolio product shelves, outsourced MPS providers are having to compete vigorously with insourced solutions. Outsourced model portfolio providers, therefore, may need to do their homework when segmenting the financial adviser channel, as not all shelves show the same degree of openness. The report once again found that model portfolio product shelves remain narrow, as fewer than 20 percent of advisory firms were found to use more than five model providers.
For the third straight quarter, in Q2 2023 passive funds accounted for more than 30 percent of model gross sales, indicating that cost at the model and fund level is rising in importance. Of the 10 best-selling IA sectors, passive sales grew fastest in Europe (excluding the U.K.) and in the North America sector. ESG/sustainable fund sales continued to hover around the 20 percent mark, with sales in this category largely going into active funds. Big movers were observed in both the best-selling active and passive model provider rankings.
The report also analysed the best-selling model providers and fund managers by six-month model gross sales. The best-selling model providers between January 1, 2023 and July 1, 2023, were: (1) Quilter; (2) Tatton Investment Management; (3) Financial Express; (4) LGT; and (5) Brooks Macdonald. The report found the best-selling fund managers for the same period, also by gross sales, to be: (1) Vanguard Asset Management; (2) BlackRock Investment Management; (3) Fidelity International; (4) Legal & General Investment Management; and (5) Quilter Investors.
“Model portfolio services have grown by leaps and bounds in the past decade and, as evidenced by ISS MI’s analysis of the first half of 2023, now seem positioned to become the default mass affluent option for many advisory firms. The form this will take, and who will hold the fund selection reins, however, are still up for debate, making the story of model portfolios and their impact on the U.K. fund distribution landscape a continuously interesting space to watch,” said Benjamin Reed-Hurwitz, EMEA Research Leader at ISS MI.
Learn more about the U.K. Model Portfolio Report here, or contact mi_emeasales@issmarketintelligence.com.
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About ISS Market Intelligence
ISS Market Intelligence (MI) is a leading global provider of data, analytics, insights, media, and events solutions to the global financial services industry. ISS MI empowers global asset and wealth management firms, insurance companies, distributors, service providers, and technology firms by providing cutting-edge market-engagement platforms and the actionable intelligence necessary to fully assess their target markets, identify and analyze the best opportunities within those markets, and execute on comprehensive go-to-market initiatives to grow their business. ISS MI clients benefit from our increasingly connected global ecosystem that leverages a combination of proprietary data, powerful software and analytics, timely and relevant insights, in-depth research, as well as an extensive suite of industry leading media brands that deliver unmatched market connectivity through news and editorial content, events, training, ratings, and awards. ISS MI data and analytics solutions include intelligence from BrightScope, Discovery Data, Financial Clarity, Flowspring, FWW, Investor Economics, MISight, Mortgage Clarity, Plan for Life, RainmakerLive, and Simfund, and ISS MI media brands and market-engagement platforms include Chief Investment Officer, PlanAdvisor, PlanSponsor, Financial Standard, FS Sustainability, Money, and Industry Moves.
Media Contact:
Audrey Dedrick
Associate, Communications
press@issgovernance.com
Model Portfolios Remain a Key Driver of U.K. Gross Fund Sales, ISS Market Intelligence Finds
LONDON (September 27, 2023) – ISS Market Intelligence (ISS MI), a unit of Institutional Shareholder Services and a leading global provider of data, analytics, insights, media, and events solutions to the global financial services industry, today announced the publication of its second U.K. Model Portfolio Report, an examination of trends and developments shaping the U.K. model portfolio market in the first half of 2023. The report suggests that 2023 has witnessed a renewed opportunity set for model portfolio solution providers as investment fund gross sales in the financial adviser channel have bounced back from their lows of the third quarter of 2022.
The report found that model portfolio investment fund gross sales grew by 13 percent over the first six months of 2023, outpacing overall sales growth in the funds channel. Driving the growth was greater adoption of models by those firms already using models in some capacity. While financial adviser firms using model portfolios accounted for about 90 percent of the channel’s gross sales, their share of sales going towards these programs increased by 3 percent over the period, topping out at 57 percent.
The report further highlights that when it comes to model portfolio product shelves, outsourced MPS providers are having to compete vigorously with insourced solutions. Outsourced model portfolio providers, therefore, may need to do their homework when segmenting the financial adviser channel, as not all shelves show the same degree of openness. The report once again found that model portfolio product shelves remain narrow, as fewer than 20 percent of advisory firms were found to use more than five model providers.
For the third straight quarter, in Q2 2023 passive funds accounted for more than 30 percent of model gross sales, indicating that cost at the model and fund level is rising in importance. Of the 10 best-selling IA sectors, passive sales grew fastest in Europe (excluding the U.K.) and in the North America sector. ESG/sustainable fund sales continued to hover around the 20 percent mark, with sales in this category largely going into active funds. Big movers were observed in both the best-selling active and passive model provider rankings.
The report also analysed the best-selling model providers and fund managers by six-month model gross sales. The best-selling model providers between January 1, 2023 and July 1, 2023, were: (1) Quilter; (2) Tatton Investment Management; (3) Financial Express; (4) LGT; and (5) Brooks Macdonald. The report found the best-selling fund managers for the same period, also by gross sales, to be: (1) Vanguard Asset Management; (2) BlackRock Investment Management; (3) Fidelity International; (4) Legal & General Investment Management; and (5) Quilter Investors.
“Model portfolio services have grown by leaps and bounds in the past decade and, as evidenced by ISS MI’s analysis of the first half of 2023, now seem positioned to become the default mass affluent option for many advisory firms. The form this will take, and who will hold the fund selection reins, however, are still up for debate, making the story of model portfolios and their impact on the U.K. fund distribution landscape a continuously interesting space to watch,” said Benjamin Reed-Hurwitz, EMEA Research Leader at ISS MI.
Learn more about the U.K. Model Portfolio Report here, or contact mi_emeasales@issmarketintelligence.com.
###
About ISS Market Intelligence
ISS Market Intelligence (MI) is a leading global provider of data, analytics, insights, media, and events solutions to the global financial services industry. ISS MI empowers global asset and wealth management firms, insurance companies, distributors, service providers, and technology firms by providing cutting-edge market-engagement platforms and the actionable intelligence necessary to fully assess their target markets, identify and analyze the best opportunities within those markets, and execute on comprehensive go-to-market initiatives to grow their business. ISS MI clients benefit from our increasingly connected global ecosystem that leverages a combination of proprietary data, powerful software and analytics, timely and relevant insights, in-depth research, as well as an extensive suite of industry leading media brands that deliver unmatched market connectivity through news and editorial content, events, training, ratings, and awards. ISS MI data and analytics solutions include intelligence from BrightScope, Discovery Data, Financial Clarity, Flowspring, FWW, Investor Economics, MISight, Mortgage Clarity, Plan for Life, RainmakerLive, and Simfund, and ISS MI media brands and market-engagement platforms include Chief Investment Officer, PlanAdvisor, PlanSponsor, Financial Standard, FS Sustainability, Money, and Industry Moves.
Media Contact:
Audrey Dedrick
Associate, Communications
press@issgovernance.com
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