Adviser attention turns to fixed income in Q2 2020, according to Square Mile MI Report

The Square Mile quarterly MI Report finds that fixed income has gained considerable ground on equities. The M&G Emerging Markets Bond fund was also revealed to be the most viewed overall, accounting for one in five of funds views. 

There was a significant increase in interest in fixed income among financial advisers in the second quarter of 2021, according to the quarterly Market Intelligence Report released today by Square Mile Investment Consulting and Research (Square Mile).  Views of this asset class in Square Mile’s Academy of Funds accounted for 35.2% of all searches, up from 19.9% in Q1, while multi-asset searches halved to 16.3% and equities remained broadly static at 48.1%.

While no clear pattern emerged overall at a fund level, fixed income vehicles led the pack of the most viewed funds in Q2.  In pole position of all rated funds was the M&G Emerging Markets Bond fund, which accounted for one in five of funds views, representing an increase of 19.3% on the previous quarter.  The Threadneedle Social Bond and Wellington Global Impact Bond funds took first and second position respectively among funds with Responsible ratings.  The popularity of the M&G fund also propelled the asset manager as well as the IA sector that it sits in – the IA Global EM Bonds Blended – to the top of their respective charts.

Square Mile’s Market Intelligence Report captures viewing patterns among users of its Academy of Funds which provides insights and data on all 329 funds* rated by the company’s 20-strong team of analysts.  In terms of searches per investment outcome, income put in a strong performance, rising from 7% to 20.3% while capital preservation dropped sharply to 13.5%.  Capital accumulation continued to dominate although registering little change on the previous quarter at 59.5%.

During the second quarter, news of personnel departures at Aberdeen Standard Investments meant several of their Risk Targeted ranges were removed from the Academy. As a result, Liontrust Partners, Legal & General Investment Managers and Premier Miton Investors took up the mantle as the most viewed risk targeted groups over the quarter, with Liontrust registering an increase in views of 26.8% to 37.0%.   Meanwhile, among passive fund management houses, although it slipped by 7.5%, Vanguard held its top position ahead of Legal & General and BlackRock, while views of its closest rival Legal & General increased by 7.9%.

Jock Glover Chief Operating Officer, Research and Consulting at Square Mile, comments:

“As the Covid vaccine roll out gathered a head of steam during the second quarter of the year giving greater confidence to the easing of pandemic-related restrictions, the broad global equity indices continued to grind higher, with the US and European equity markets helping drive that performance. However, this more positive picture was not universal: Asian equities were more muted while in fixed income markets, bond yields reversed some of their Q1 performance.

“The fact that there was no discernible trend among the most researched funds over Q2 might suggest that advisers are looking at a broader universe of investment opportunities for their clients.  With the IA Global EM Bonds and IA Global being the most viewed IA sectors and the IA UK All Companies dropping down the ranks by 13.4%, there is the implication that advisers are spreading the net further afield, although the IA UK Equity Income sector continued to be popular, coming in third place.  However, the drop in searches for vehicles that seek to provide capital protection as an investment outcome implies that, as the pandemic subsides, or at least as society and economies learn to live with its impact, there is a greater appetite for risk among investors.”

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