Financial planner usage of direct equities has stalled for now but is set to make a comeback in the medium-term, according to a recent Investment Trends report.
The March 2012 Planner Direct Equities Report found planners placed 30 per cent of new client funds in cash and term deposits in the year to March 2012, up significantly from 18 per cent last year and 16 per cent at the end of 2010.
The increase came at the expense of direct listed investments, experiencing 21 per cent of new flows down from 23 per cent last year but managed funds took the greatest hit, receiving 36 per cent of new flows down from 52 per cent.
"What happened at the end of last year was that planners started doing a lot more cash than term deposits and that depressed the levels of new flows going into both direct shares and managed funds," Investment Trends senior analyst Recep Peker told InvestorDaily.
"The growth in shares and direct listed investments such as exchange-traded funds, real estate investment trusts and listed investment companies, is coming largely at the expense of managed funds, more so active than passive.
"While they both came down a bit, when we asked planners what they expect for the medium-term, they're saying they will increase their use of direct equities."
Direct equity growth will remain stalled for now but while planners expected to see the growth of direct equities resume, they didn't expect managed funds to return to previous levels, Peker said.
Planners expect to increase their use of direct listed investments in the medium-term, anticipating 31 per cent of client funds being invested into these by 2015, the report said.
They anticipate managed fund flows to remain at 2012 levels in 2015.
