Single asset funds accounted for an estimated 35% of all fund recommendations last year, according to new data released by Defaqto.
In the period from 1 April 2022 through to 31 March 2023, single asset fund recommendations equating to a value of £12.6bn were made through Defaqto’s “Engage” software.
The figure marks a 47% increase in single asset fund recommendations over the last three years, up from £8.6bn for the year ending 31 March 2020, with Defaqto suggesting it “challenges the industry perception” that multi-asset funds form an overwhelmingly large majority of adviser recommendations.
With approximately 75,000 share classes of over 13,000 single asset funds available, Defaqto also suggested that it can be difficult for funds to stand out to advisers without the right ratings and reviews.
Defaqto’s data shows that advisers’ top search criteria last year were performance returns, followed by “diamond ratings”, which was a more popular factor than costs or ratios when researching single asset funds. Funds receive a Defaqto diamond rating based on a completely independent and unbiased quantitative assessment, using a transparent research process.
“As our data shows, the trend towards single asset funds is compelling,” said chief commercial officer at Defaqto, Glenn Porter. “They have become an important focus for us because of the huge increase in recommendations we’ve seen.
“We are uniquely positioned in the market to raise the profile of funds that both assist asset managers in distribution and support advisers in making smarter financial decisions for their clients.”
Defaqto provides the UK’s largest financial product database to support firms across the financial services sector. Following the rise of single asset funds, it has appointed single asset fund expert, Rion Barker, to help fund and asset managers promote and distribute single asset funds.
Barker has joined from Fintel Group sister company, SimplyBiz, where he spent more than six years. At Defaqto, he will help asset managers to raise visibility of their funds among financial advisers through diamond ratings, as well as risk ratings, fund reviews, ESG reviews, analytics, and events.
“Having followed the expansion of the single-strategy universe, I’m very excited about the growth in this area and joining Defaqto’s team of experts,” Barker added. “The industry in general tends to focus on multi-asset; however, as our data shows, the single asset market is very much alive and well.”
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