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Advisers to increase passive exposure, Platforum study finds

Adviser appetite for passive investment products is likely to increase over the next six months, research by Platforum has found.

The split between active and passive investment strategies for clients during the second quarter is 72.5 per cent for active funds, with the remainder held in passive, compared with the first quarter’s 70/30 split.

However, advisers expect to increase exposure to passive strategies over the next six months to 36.1 per cent.

Platforum’s research showed that cost was the biggest influence on decisions over investment strategies, with 39 per cent of advisers mentioning it as an important factor.

Managing costs should favour passive investment products, which have typically demonstrated lower charges than actively-managed strategies.

Client suitability was cited as an influencing factor by 32 per cent of advisers, while performance was mentioned as a key driver of investment decisions by 29 per cent of the 70 advisers polled.

Nick Blake, the head of retail at Vanguard Investments UK, says support for the passive investment market came from different areas.

He says there was quarter-on-quarter growth for passive strategies, demonstrated by figures from the IMA.

Blake says: “We’re also seeing terrific support from funds of funds using these strategies.”

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