UK platforms lifted by stock returns but flows still under pressure

Flows into UK fund platforms were comparatively weak in the first quarter of 2024, yet platform assets were propelled by stock market returns to over £1 trillion.

Returns from the FTSE 100 and US stock markets caused a 9.4% rise in platform assets under administration – equating to £89.4 billion.

Yet the cost-of-living crisis and the “siren call” of cash continued to depress inflows, according to Fundscape data.

Gross flows were £38 billion and although net flows “bounced up” to £7 billion, this failed to match the volumes of previous first quarters.

Bella Caridade-Ferreira, CEO of Fundscape, described the ISA season – the period where tax-efficient ISA funds are topped-up ahead of the fiscal year-end – as a “damp squib” and some advised and direct-consumer platforms saw net ISA outflows.

However, pension business surged, recording its best gross and net flows in two years.

Caridade-Ferreira said: “We’re in a period of change — hopefully, we’ll see stronger flows in the second quarter and beyond. The Bank of England has signalled that interest rates will drop in the summer, which will help to level the playing field between cash and investments.”

Interest rates were a “light at the end of the tunnel” but need to come down to around 3-3.5% for cash and investment to survive, said Caridade-Ferreira.

A total of 19 platforms were included in Fundscape’s Platform Report – an estimated 98% of the platform market.

 

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