Fund platform benefits from isa sales boost

Mark Jones, marketing and development director at Cofunds, answers questions from Frances Hughes.

Q: The Investment Management Association recently released statistics showing that the 2005/6 Isa season was the best since 2002. How has Cofunds done in terms of Isa sales over the past year?

A: Very well. In the first quarter of this year the IMA reported a 39% growth in gross Isa sales compared with the same period in the previous year. Cofunds’ equivalent figure is 73%.

Over the tax year 2005/6 we had 48% year-on-year growth compared with the IMA overall growth figure of 26% for Isas. We also have a wide coverage of the market in terms of who takes up our Isas.

Q: Why are Isa sales increasing? Is it a trend that is likely to continue?

A: It is hard to comment, but there has been a pick-up in demand. The awakening of the stockmarket has helped. There has been a general increase in confidence in the market and recognition of the importance of investing and having an integrated portfolio. We are definitely seeing more confidence.

Q: The specialist sector has been popular and one platform says this is primarily because of property funds [from January this year property funds could be included in Isas]. Have you seen this at Cofunds?

A: Yes, property has been popular. It is definitely growing and is featuring in the top-selling funds. Another sector I should highlight is UK Equity Income, while funds of funds also continue to do well.

Q: Can you give some specific examples of the most popular funds?

A: Top-selling funds for lump sum Maxi Isas in March 2006 included Invesco Perpetual’s Income and High Income funds, New Star’s Property unit trust and the Artemis European Growth fund. Invesco Perpetual High Income was the top-seller in both March 2005 and March 2006.

Q: Fund supermarkets were the key to Isa distribution in March, with gross sales of 447m. Why do you think this is?

A: We have seen the uptake in fund platforms increase over the past four years, and particularly in the past two. Before the tax year-end we were projecting that platforms would account for around 70% of the Isa sales of intermediaries. Recent IMA statistics suggest this projection turned out to be accurate. [IMA statistics show fund supermarkets took 85% of net ISA sales in the 2005/6 tax year].

It is mainly because it is a logical way of investing. There are huge advantages for investors and intermediaries because it is open architecture. The funds we offer are based on demand in the market.

It is easy to rebalance at any time. Platforms offer a lot of convenience and investment choice. We have more than 800 funds to choose from at Cofunds – plus the whole portfolio can be kept in one place.

Before platforms existed, investors would have five, six or seven managers. Using Cofunds is a lot simpler. You can instantly get valuations of whole portfolios as well as full online transaction histories. It is tremendously powerful for the adviser and their customers. They have instant access to lots of information all in one place.

Q: Is technology one of the most important contributors to Cofunds’ success?

A: Technology supports a lot of the propositions that we do and there is a whole range of tools. The things that we make straight forward are re-registration and consolidation.

Easy re-registration means that clients who wish to retain their existing funds can do so via a simple transfer. They do not need to sell and buy back their holdings.

In terms of Cofunds’ success, I would say half of it is down to new business and the other half to re-registration of historical assets. The ease we offer makes us different from other platforms.

Q: What is the ‘Cofunds Consolidation Assistant’?

A: It is a tool that makes the process of consolidation streamlined and easy.

Q: Can your portfolio management tools help with research and analysis?

A: We have allocation tools that help intermediaries to identify risk profiles and put portfolios together. Research tools are also available on our website. It is quite easy to integrate this information into the research process.

Q: Cofunds allows intermediaries to buy and switch online, produce online valuations and generate full online transaction histories. How important are these tools for intermediaries? Are they popular?

A: Increasingly so. We have seen a significant take-up of these tools. They have direct intermediary benefits, in that they save a lot of time, are instantaneous and allow them to spend more time on advice rather than administration. It is also simple and easy to navigate and saves administrative costs.

There is one application, one payment and one statement. Plus there are no extra charges to intermediaries and their clients. These are tangible savings.

As well as providing investment choice and a set of tools, we can also increase revenue opportunities. Cofunds is the largest platform in the intermediary market and has 7.5bn worth of assets under administration.

Q: Which funds in general, not just Isas, were the most popular last year?

A: It is the same as for Isas. They have the same objectives. The funds of funds are proving attractive, but sales are dominated by UK equity.

Q: Have you seen any changes?

A: We are seeing more planning. Our biggest Isa day was the first day of this tax year 2006/7. People increasingly understand the importance of investing and planning ahead.

Q: What plans have you got at Cofunds? Are there any new developments?

A: We launched our onshore Life Investment Bond in February. We are delighted with the take-up. We did a lot of research and the response was overwhelming.

What we got from it was that there were two tax wrappers we should add. One was the onshore Life Investment Bond and the second was the Open Architecture Pension, which was launched on A-day. The market told us where we should go and these are now integrated into the platform. We are also developing a new generation of asset allocation tools, to be unveiled soon.

Mark Jones is the marketing and product development director at Cofunds, an independent fund platform that was launched in 2001. He joined Cofunds in 2004 from Zurich Financial Services, where he worked for nine years, holding several senior marketing and strategic development roles.