Model portfolio services (MPS) continued to dominate sales in the UK financial adviser distribution channel in the first half of 2025, analysis from ISS Market Intelligence (MI) has shown.

Total net model portfolio sales reached £7.8bn in H1 2025, making up 44 per cent of gross investment fund sales during the period.

ISS MI noted that multi-asset funds outside of MPS also experienced strong demand, with £1.2bn in net sales and the largest year-on-year increase across all solution categories.

Meanwhile, net sales of single-strategy funds outside of MPS recorded net outflows of £3.1bn in the fist six months of 2025.

“The realignment of the adviser market towards multi-asset solutions is unmistakable,” commented ISS MI head of research development, EMEA & North America, Benjamin Reed-Hurwitz.

“Model portfolios in particular have become the preferred vehicle for advisers seeking to combine efficiency, cost-effectiveness and consistent outcomes for clients.

“MPS providers’ ability to streamline the portfolio construction process at an attractive cost, thus allowing advisers more time to focus on client relationships and practice management, is a major driver behind their adoption.”

The data also revealed that gross sales of active and passive funds through MPS were evenly split in H1 2025, which ISS MI said highlighted the balanced nature of portfolios.

“Advisers are increasingly searching for solutions that can balance low costs with alpha generation and differentiation,” Reed-Hurwitz added.

“Since Liberation Day earlier this year, volatility has remained top of mind for both advisers and investors. That has created a window for strategies that offer differentiated exposures, particularly within portfolios that use broad-based indices as their core.”

Global and North American equity funds led the way for active strategies within model portfolios, while strategic bond, target absolute return, and specialist sectors also recorded strong inflows.

Unitised multi-asset funds continued their turnaround that began in 2024 amid concerns over capital gains tax changes, with net sales largely driven by advisers dedicated to the solution.

Strategies with an ongoing charge figure of less than 40bps saw net sales of £2.5bn in H1, although demand remained for solutions across the pricing spectrum.

“As with MPS, advisers are increasingly constructing portfolios that blend passive and active approaches,” Reed-Hurwitz said.

“This leaves significant headroom for fund managers who can deliver a differentiated multi-asset proposition – whether that’s through innovative allocation, specialist expertise or a proven performance edge – along with lower cost solutions.”

While single strategy funds appeared to be struggling to attract investor funds, ISS MI noted that there was still a dedicated segment of advisers committed to the approach.

“Overall, the adviser platform market is being driven by the twin forces of value and differentiation when it comes to portfolio construction,” Reed-Hurwitz said.

“While cost-consciousness continues to fuel passive adoption, advisers still want portfolios that stand apart from the pack. For those partnering with advisers, differentiated offerings can come through price, service models or portfolio management.

“Competition remains hot for advisers’ attention, and segmentation of advisers by preference has become essential to making sure the right solutions are reaching the right advisers.”

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