Brooks Macdonald’s investment solutions service for advisers saw funds under management climb 60 per cent in the second half of last year.
Andrew Shepherd, the firm’s chief executive, told FTAdviser today (March 10) outsourcing discretionary fund management is “definitely something advisers want to talk to us about”.
Total funds under management climbed £800mn to £17.3bn in the six months leading up to December. They were up 5.3 per cent over the half year.
“Success has been all about working with advisers who want to outsource to DFMs,” said Shepherd, who himself started off in financial planning before moving into investment management.
“It really is about partnering with IFAs, which is something we’ve been strong on for the last 20 years. At this point in time, it's definitely something that advisers want to talk to us about.
“It is a big change for them in the structure of their businesses, so we don't do one a week of these. But when they [advisers] do make that change, it's a really good partnership between us.”
Shepherd said flows can become quite lumpy when clients come onboard via its business-to-business adviser offering, which it calls ‘Brooks Macdonald Investment Solutions’. “It doesn't happen every quarter because it is such a big change.”
Net flows between July and December reached £326mn, turning positive after the investment manager recorded £367mn of outflows in the second half of 2020, according to its half-year financial results published today.
“Net flows have picked up over the quarters,” said Shepherd.
The firm’s Platform Managed Portfolio Service accounted for a portion of this rise in funds under management, recording a 20 per cent uptick in inflows over the half-year.
Asked about fund performance, Shepherd said the second half of last year “was ok”. In the final three months, funds achieved just half of the gains set by the benchmark index.
He said this was down to the fact that compared to the MSCI Pimfa Private Investor Balanced Index, which is “very index-based and large cap-based”, Brooks Macdonald and its peers have more small and medium cap exposure than the index does.
“So at times like this when the large cap are doing well, predominantly because oil is doing really well, and energy is doing really well, and defence, then we would underperform the index. What we look at is how we’re doing against peers, and we seem to be pretty much in the middle of the pack.”
Shepherd said this was the case for the first two months of this year too. Though the firm did confirm in its results it had no direct exposure to Russia in its discretionary client portfolios or its funds. While indirect exposure sits at around 0.1 per cent of total funds managed.
