There has been a shift in the ownership of investment companies away from wealth managers and towards institutions and private investors, the Association of Investment Companies (AIC) has revealed.

Its analysis of 89 per cent of the industry’s market capitalisation found that wealth managers’ ownership share of investment companies has fallen from 27 per cent in 2022 to 24 per cent.

This decline was particularly evident in wealth managers’ ownership of alternative asset investment companies, which fell from 24 per cent in 2022 to 17 per cent.

Meanwhile, institutions’ share of investments companies has risen from 46 per cent to 48 per cent over the same period, and their share of alternative investment companies increased from 65 per cent to 72 per cent.

Private investors held 26 per cent of investment company shares, up from 25 per cent in 2022, while their stake in equity investment companies rose from 35 per cent to 37 per cent.

The share of investment companies held by adviser platforms has fallen slightly from 2.4 per cent to 2.1 per cent.

Wealth managers were still significant holders of infrastructure investment companies with a 32 per cent share in the asset category.

“Investment companies continue to attract a broad range of investors, but their shareholder base is changing,” stated AIC chief executive, Richard Stone.

“Wealth managers have been under pressure to sell investment companies due to the frustrating cost disclosure rules, which have made portfolios containing investment companies look artificially expensive. This has had a particularly acute impact on the alternatives sectors.

“Meanwhile, we’ve seen an increase in interest from investors attracted by deep discounts, including overseas investors, which has boosted the share held by institutions.

“Self-directed private investors are big holders of mainstream equity investment companies and continue to favour those that offer consistent and reliable income, holding 55 per cent of the UK Equity Income sector for example. Their share of equity investment companies has increased over the past two years and is now running at 37 per cent.”

Data from the ISS Financial Clarity revealed that while total purchases of investment companies on adviser platforms amounted to £852m in 2024, there were also sales of £1.11bn, resulting in negative net demand of £254m as cost disclosure rules “continue to deter” advisers and wealth managers from including investment companies in portfolios, alongside a broader shift towards passive investments.

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