Wealth Managers and Investment Platforms See Record Cash Flows, Enjoy Boom – MoneyController

Healthy optimism

Brewin Dolphin and investment platforms like Hargreaves Lansdown have been registering record cash flow as stock markets soar and more novice investors try their hand in the market for the first time. Brewin funds are up by 8% in the last three months, motivated by strong performance and more investors showing up. Pension funds and ISA shares have surged as the FTSE 100 gained more than 1500 points in March. Despite its cost cutting program, which was introduced at the onset of the pandemic, Brewin is now generating impressive returns of up to 7%, or £96 million. Robin Beer, their Chief executive stated, “With a Brexit trade deal behind us and the rollout of vaccinations in the UK, market sentiment is starting to improve, and we look forward to benefitting from this recovery over the coming year.”

Or a bubble in the making?

There are fears, however, that a stock market bubble could be growing and soon burst. If this were the case, small investors would take the brunt of the blow, having taken on more risk than they had bargained for. In the US, investors are also hyped, especially in the tech space. The craze is being further egged on by Tesla’s CEO, Elon Musk, whose cryptic, provocative, and potentially dangerous Tweets tend to exacerbate market drama. GameStop, a US videogame retailer that was struggling financially in previous years due to the rise of digital sales, is now seeing astronomic rises in the price of its stock. Russ Mould of AJ Bell said that amateur investors on Reddit were battling up with hedge funds that had been shorting GameStop. No doubt to Musk’s amusement.

The Bank of America calculated that $255 billion has been shoveled into equities over the last three months. Reports indicate that 79 American companies’ share prices have more than doubled in these last three months. A new index dubbed the “ludicrous index” was created to track this phenomenon. Beer has stated that in this current context, Brewin’s mission is to protect investors from speculative bubbles in which there are a lot of shifting valuations.
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