Square Mile: Adviser Interest in Income Strategies Falls as Capital Accumulation Surges

by | Apr 12, 2024

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  • Investment boutique Havelock steals double crown of most researched group and fund
  • Liontrust returns to lead as most researched company for risk targetted solutions
  • abrdn UK Smaller Companies Growth and Fidelity Special Values most researched investment trusts

In its latest quarterly Market Intelligence Report published today, Square Mile has detected a steady decrease in adviser interest in funds targeting income, while capital accumulation-oriented strategies continue to gain attention. 

In Q3 2023, income-related fund research accounted for 46.7% of searches conducted via the Academy of Funds, dropping to 40.6% in Q4 and 32.0% in Q1 2024.  This trend was reversed for strategies with the potential of growing capital, which took a 33.3% share of all searches in Q3 2023, rising to 46.0% over the first quarter of 2024.  However, these investment outcomes were both well ahead of capital preservation and inflation protection at 14.0% and 8.0%, respectively.

Square Mile’s quarterly MI Report is a detailed register of viewing patterns among advisers using the Academy of Funds, a depository of insight and opinion on all 377 active, passive and risk targeted funds and investment trusts* rated by the company’s 20-strong team of analysts.  It provides an indication of sentiment among fund selectors towards investment outcomes, funds and fund groups and asset classes.


There was a significant change in leadership in the most researched fund groups in Q1 2024, with boutique fund house Havelock leading the pack, accounting for nearly one in ten searches (9.4%).  Meanwhile industry heavyweight Schroders fell from pole position to fourth place with 3.9%, trailing both First Sentier (4.7%) and Jupiter (4.2%).  Havelock’s Global Select fund was also the most viewed active fund overall with a 12.3% share, 8.1 percentage points ahead of its nearest rival, the WS Amati UK Listed Smaller Companies fund which stood at 4.2% and 10 percentage points ahead of Aegon Diversified Monthly Income fund, the most researched fund in Q4 2023.

In the first full quarter of data on research patterns among advisers into closed-ended funds since Square Mile launched its investment trust ratings in November 2023, abrdn UK Smaller Companies Growth Trust was the most viewed at 11.64%, just ahead of Fidelity Special Values PLC with 11.4%.  The City of London Investment Trust and Invesco Asia Trust also vied for third and fourth place with 9.98% and 9.03% respectively.

Among fund groups offering risk targeted strategies, there was another significant shift in adviser behaviour.  Having dropped to third place in Q4 2023, Liontrust was once again the most researched asset management company, accounting for over one in four searches (26.8%). This was a 9.1 percentage point increase on the previous quarter, pushing HSBC Global Asset Management to second place with a 14.8% share, marginally above Legal & General Unit Trust Managers at 14.5%.  Groups offering passive strategies also saw another change in leadership: Vanguard moved to pole position with a 40.1% share, double that of its nearest rival, BlackRock at 20.0%, while Legal & General dropped from first to third place at 15.8%.


There was also a reshuffle at an IA sector level, with IA Global being the most researched sector at 17.6% of all views, up from fourth place in Q4 2023, and ten percentage points ahead of IA UK All Companies which came in second followed by IA Sterling Strategic Bond.  The MI Report, however, detected no change in the ranking of adviser interest in asset classes, with research remaining broadly in line with the previous quarter: equities increased its lead as standout favourite at 60.0% (53.6% in Q4 2023), fixed income was level at 25.0% (26.0% in Q4 2023), multi-asset dropped to 14.2% (19.4% in Q4 2023), while interest in alternatives remained negligible at 0.8% (1% in Q4 2023).

Scott Dakers, Business Development Director at Square Mile, said, “Many of the economic known unknowns continued to loom over sentiment as the first quarter of 2024 rolled out and market commentators have watched each new data set with keen interest.  On a political level, the coming months will see several key elections, not least in US, which may have repercussions on a global scale at a time when geopolitical tensions remain heightened.  Despite this uncertainty, we believe that when it comes to investment, it is essential to remain fixed on the long-term and our team of fund analysts is focussed on identifying those strategies with the greatest potential of consistently delivering on their stated objectives over time.

“Our latest MI Report suggests that fund selectors share this longer-term focus given their research into funds which promise capital growth over more defensive strategies.  Nonetheless, the fact that the IA Global sector was the most researched is perhaps indication of a reluctance among advisers to take regional investment calls, and a preference to delegate asset allocation to fund managers with the ability to navigate an increasingly complex global stage.”


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