UK experiences multi-asset fund upturn

Multi-asset funds have experienced a minor resurgence in the United Kingdom, according to new analysis from ISS Market Intelligence.

The research house said that net sales of multi-assets funds had turned positive in the UK for the first time in five quarters in Q2, reaching £0.5 billion, rising above £14 billion – up 25% compared to the first six months of 2023.

The analysis said that fund-of-funds had led the way, recording a six-month trailing growth rate of 33%.

Commenting on the data, ISS MI EMEA Research leader, Benjamin Reed-Hurwitz said the results were encouraging but it was too early to call it a trend.

“At the very least we’ll need to see that replicated in the next quarter’s data to make a call,” he said.

Reed-Hurwitz attributed at least some of the rebound to tax changes in the UK.

“The previously speculated changes around capital gains tax could well explain why more investor money is being directed towards multi-asset funds, given their tax efficiency,” he said.

“If this was the case, then the recently confirmed tax changes should add strength to this trend. As a single fund made up of multiple underlying funds, multi-asset funds allow managers to make asset changes without triggering a CGT liability, unlike model portfolios.

“Still, net sales of just £100 million suggest there’s significant churn within the category, with capital largely flowing between fund groups instead of new cash being invested in these vehicles.”