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Small firms win a big Isa share

Turbulent stockmarkets ens-ured this year&#39s Isa season would be a bumpy affair. Last year saw a clear theme of technology funds but this year is marked only by caution.

Isa sales are down by as much as 37 per cent, according to Autif. Attention is being keenly focused on who has been able to ride the storm. If the poll by Keydata is indicative of the market as a whole, then some of the big players have taken a drubbing.

Keydata carried out the poll of IFAs to see which companies have been getting their Isa recommendations. The results reflect the answers of the 261 IFAs who answered a questionnaire sent out by Keydata. The questions were sent out on February 16 to 4,000 IFAs and could be seen as a snapshot of current IFA sentiment.

Fidelity in top spot surprises no one. According to Hargreaves Lansdown head of research Mark Dampier, it was already a foregone conclusion at the start of the year. To see M&G, Schroder and Merrill Lynch languishing in the mid-teens might come as more of a surprise, given their size.

M&G director of corporate communications Simon Anderson says: “We do question the methodology of PR surveys such as this. When the dust settles, the findings bear little relation to reality.”

He says previous Keydata surveys in January were wide of the mark, predicting higher sales of Isas and technology funds.

Merrill Lynch head of UK retail Julian Ide says the firm has had strong support from the top end of the IFA sector which is its traditional market.

There is satisfaction from the smaller investment houses which have punched above their weight, such as ABN Amro and Exeter. The top 20 contains a couple of real surprises – both Exeter Fund Managers and Norwich Union have conspicuously high levels of IFA endorsement.

Keydata director of retail sales Mark Owen believes the results are a demonstration of IFAs&#39 capacity to move beyond the predictable main investment houses and identify the most suitable funds for their clients. But he adds that IFA sentiment lags slightly behind the market as a whole.

Dampier, like Owen, sees IFAs&#39 – and the their clients&#39 – recommendations as reactive rather than constitutive of market sentiment.

He says: “IFAs and private investors tend to lag the market by about a year.”

ABN Amro is cited as an example of a fund management house that has achieved a very high profile without much in the way of an advertising campaign. Dampier says its high standing is largely due to its star manager Nigel Thomas, and the extensive editorial coverage he has received.

ABN Amro itself puts its success down to marketing carefully to IFAs, who are its sole channel of distribution. It has eschewed huge advertising spends and directed its attention towards IFA roadshows and presentations.

But Dampier has a caveat. He says: “I am not sure if they have all piled in at the wrong time. The time to have done so was before Thomas became so famous. I do think the fund has now become too big.”

He adds that the strong performance of Newton is also due to the marketing being focused at IFAs.

Exeter Investment Group managing director Ian Joliffe says he is gratified by the results of the poll, saying the company was nowhere near the top 20 last year. “We have been getting everything right at the same time in terms of profile and performance. I think we have got a reputation for having a safe pair of hands.

“Last year we suffered as we did not have tech stocks.I think IFAs, in the light of the market, have probably been looking around and asking themselves who didn&#39t play the game last year. Instead, they would have been looking for good long-term performance, and our defensive stocks and zeros would have appealed.”

Dampier and Chase de Vere investor services manager Anna Bowes agree with this assessment of the reasons for Exeter&#39s success.

Jupiter put in a strong performance to reach third place. Bowes says: “I am surprised but glad to see Jupiter so high up. It would seem to have bounced back from the problems it was having.”

Whether this year&#39s Isa sales will tell of a shift to a different longer-term investment strategy is too early to say. Given this year&#39s Isa sales, loss of market share will hit some investment houses particularly hard.


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