The quarterly Market Intelligence Report released today by Square Mile Investment Consulting and Research (Square Mile) suggests a renewed adviser interest in UK equities in Q4 2020. IA UK All Companies was the most researched sector over the final quarter of the year and three UK equity funds were among the ten most popular, with the AXA Framlington UK Select Opportunities fund being most viewed overall followed by Ninety One UK Alpha and AXA Framlington UK Md Cap in fifth and sixth place respectively.
Square Mile’s Market Intelligence Report captures viewing patterns among users of its Academy of Funds which provides insights and data on all funds rated by the company’s 20-strong team of analysts. Equities dominated adviser searches by asset class, accounting for 51% of the total although this was slightly down on the 55% registered in Q3. Multi Asset and Fixed Income received 31% and 18% of total views respectively, with Property barely registering at 0.2%.
Within Square Mile’s Responsibly rated universe, the Baillie Gifford Positive Change fund, which recently received a Responsible A rating, was the most viewed fund with a 13.1% share and was the seventh most viewed fund overall. The EdenTree Investment Funds Amity Short Dated Bond fund was just behind in second place among Responsible funds and eighth place overall. This interest in ESG and Responsible investment was also evident in advisers’ use of the Fund Dashboard which provides a snapshot on the five most important elements of a fund when making investment decisions. The ESG pillar was the second most frequently accessed, accounting for 31.1% of all views after Opinion, which attracted 33.8%.
Among searches by investment outcome, Capital Accumulation was the clear leader, accounting for 47.6%. While Income came in second at 25.8%, three income-oriented strategies, the Aegon Diversified Monthly Income fund, the M&G Episode Income fund and the Schroder Income fund, all appeared in the top ten most researched funds. Inflation Protection was the least popular outcome with an 8.9% share.
Among risk targeted funds, the newly rated Embark Horizon range of funds was the most visited with 8.7% of all views. However, Aberdeen Standard Investments and Legal & General still dominated as the management groups with the highest number of searches within that sector. In the passive funds sector, Vanguard Investments retained the top spot at a group level with over third of all views and its LifeStrategy range of funds was the most researched.
Jock Glover Chief Operating Officer, Research and Consulting at Square Mile, said, “Q3 may have ended with some mild profit-taking in equity markets, but Q4 saw an extraordinary continuation of the rally that started in late March 2020. Global equity markets rose in mid teen percentages and the UK equity markets were no different. It is perhaps unsurprising that after a poor Q3, advisers looked to the UK equity market for ideas in Q4. That is not to say there was not an element of caution. The fact that the IA Mixed Investment 20-60% Shares sector was the second most viewed would suggest that advisers are seeking to build a buffer against any potential sell offs. It is interesting to note that while many market commentators believe that inflation is due to make a comeback in 2021, Inflation Protection was the least researched investment outcome.
“Over recent years, a head of steam has been building behind ESG and Responsible investment and these approaches arguably entered the mainstream in 2020 as the Covid-19 pandemic steeled the resolve of investors to make a difference with their money. This was evident by the number of advisers researching funds which carry our Responsible ratings, or using ESG as a starting point for their research via the Fund Dashboard. However, with this greater popularity will come greater scrutiny as intermediaries seek to differentiate between funds which have these principles hard baked into their DNA and those which have merely adopted a green veneer. The independent, rigorous research which sits behind Square Mile’s Responsible ratings, ESG Integration assessments and 3D Impact ratings and certifications should enable advisers to separate the wheat from the chaff in this respect.”