move signals association's attempt to give truer picture in monthly fund sales statistics
The IMA has taken the first step towards splitting out fund supermarket Isa sales in its monthly statistics in order to give a more accurate picture of fund sales
It faces a number of issues in attempting to clarify the level of business done through the supermarket channel as well as which distribution channel those sales should be attributed to.
At the moment, Isa sales information via supermarkets is difficult to ascertain due to competitiveness between the platforms and the lack of administrative capability to separate out sales data into channels, fund types and sectors.
The association has written to members proposing a redefinition of sales channels as part of its consultation with the industry about a uniform way of reporting fund supermarket Isa sales. The current method of attributing Isa sales distorts industry sales figures by up to several hundred million pounds a month.
Over the past few months the association has published a separate survey for the sales of Isa unit trusts through fund supermarkets in its monthly release of industry sales. Previously these figures have been reported as institutional sales. This is due to the difficulty in stripping out Isa sales from straight unit trust purchases via these platforms as they are often processed as a bulk order. Ideally, the IMA wants to be able to incorporate these sales into its existing matrix of IMA sectors and distribution channels but this raises a number of difficulties.
At the moment the sales information it receives from fund supermarkets is not broken down by fund or by sector.
While the investment industry has become accustomed to sharing sales figures with the industry's trade body, the younger, competitive fund supermarket providers are more cautious in what information is being disclosed.
If the association does include fund supermarket business, there remains a question over which distribution channel it should be attributed to. The IMA definition of the intermediary channel covers sales where advice has been given whereas direct transactions are those that are instigated and executed independently by the consumer. Dorian Carrell, head of statistics at the IMA, said following this logic, all business through discount brokers should be included in the direct channel. The IMA goes on to question whether it is possible to identify discount broker business separately and ensure that it is included in the direct channel.
Carrell said: 'Under this system, fund supermarket sales through the intermediary channel should include all transactions carried out by IFAs and transactions by retail investors using fund selection tools or questionnaires to help determine their asset allocations and fund choices.'
Angus Duncan, head of investment sales at Skandia, said taking into account sales via any third party distribution has been an ongoing problem, one that is more complicated than just Isa sales. While agreeing that everyone could benefit from full disclosure of sales, he noted that it is an issue of competitiveness and also method. He added: 'Sharing information is sensible but it is a case of how, what sort and what format. We've taken our first step in this process.'
At the moment all sales through Skandia create a problem with various groups reporting them to the IMA in different ways. As it is not a fund group, Skandia does not report its own figures.
The targeted audience of a supermarket also creates problems as does the exact definition of what constitutes a supermarket as some platforms are owned by fund managers; others are run by intermediaries or independent companies. Broadly speaking though, fund supermarkets can be divided into those that target the retail market and those that target IFAs.
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