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Square Mile MI Report: Advisers increasingly looking for inflation protection

  • Interest in investment outcomes suggests growing caution among advisers 
  • IA Mixed Investment 20-60% Shares most viewed sector 
  • Artemis moves up 17 places to become most viewed fund group

Increasing numbers of advisers researched funds offering Inflation Protection as an outcome in Q4 2021, according to Square Mile’s quarterly Market Intelligence Report, released today. This outcome accounted for 14.5% of all searches within the Academy of Funds, up from 4.5% in the previous quarter when it was the least researched outcome, while Capital Preservation also gained ground with 13.2% of all views in Q4. Capital Accumulation was still the most viewed outcome, however it fell back considerably from 52.2% to 39.9% while Income stayed static at 32.9%.

Artemis Fund Managers registered a strong surge in renewed interest among advisers: it was the most popular group over the quarter, up 7.7% to account for 8.9% of all views – a considerable improvement on Q3 when it sat in 18th place with a 1.4% share. The Square Mile AA-rated Artemis Corporate Bond fund also shot up the ranks to pole position from 48th place in the previous quarter, with a 6.1% share of all searches.

Interest in Schroders waned slightly over the quarter: views were down 3.3% to 8.4%, although it remained the second most viewed group. Premier Miton sat in third place at 6.5% while two of its funds, the Premier Miton Multi-Asset Distribution and Multi-Asset Monthly Income funds, came in at second and third place by adviser searches, with 3.8% and 3.6% respectively. Among Responsible Investment funds, PIMCO Climate Bond Inst Hedged fund was the most viewed at 9.3%, up 8.5% on the previous quarter, followed by Threadneedle UK Social Bond fund and Royal London Sustainable World Trust.

In terms of views by asset class, interest in Fixed Income continued to fall; its share of searches dropped 2.5% to 27% following a drop of 6% in Q2, despite the strong interest in the Artemis Corporate Bond fund. This fall off was mirrored by views of the IA Sterling Strategic Bond Sector which was the most viewed in Q3 but fell by 5.6% to third place in Q4. Equities maintained its lead, accounting for 52% of all views while Multi-Asset increased slightly to 20.1%. Alternatives and Property again barely registered with 1% and 0.2% respectively.

Liontrust was the most viewed group offering risk-targeted solutions, driven by interest in its Sustainable Future Managed fund range, underlining the growing interest in funds which seek to create a better future for society and the planet. Meanwhile, Vanguard Investments retained the top spot in the passive funds sector, with BlackRock and Legal & General Investment Management following close behind.

Jock Glover (pictured), Strategic Relationships Director at Square Mile, said, “Developed equity markets ended 2021 higher than their starting point, but again this masked some volatility in late November and early December. In the bond markets, fears of more persistent inflation and central banks being forced to raise interest rates to combat it continued to move government bond yields higher.

“Given this challenging backdrop for bond markets, it is perhaps unsurprising that adviser interest in fixed income continued to weaken over the quarter, although the Artemis Corporate Bond fund bucked this trend to become the most viewed fund over the sector. And while Capital Accumulation continues to be the most researched investment outcome, its lead is being eroded by Inflation Protection and Capital Appreciation suggesting a growing sense of caution among advisers as they research investment options for their clients.”

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