Square Mile’s latest quarterly Market Intelligence Report has registered an uptick in interest in funds seeking to deliver Capital Accumulation over the first quarter of 2023.
Research into funds with the potential of delivering this investment outcome dominated views within the Academy of Funds, accounting for 45% of all views, followed by Income which remained broadly in line with the previous quarter at 35%.
Despite being an unpopular asset class for some time, strategies investing in UK equities accounted for two of the five most viewed funds over the quarter, with the Jupiter UK Special Situations and ES R&M UK Recovery funds in third and fourth place respectively. Both of these are value-oriented strategies which could suggest adviser interest in funds that offer the opportunity to buy into the UK market with the view that it is significantly under-valued relative to other developed markets.
The other funds within the top five invest in a range of assets with differing investment objectives. Most viewed was the Aegon Diversified Monthly Income fund, a multi-asset vehicle targeting income, followed by Havelock Global Select, a global equity fund with a capital accumulation objective. The M&G UK Inflation Linked Corporate Bond fund was in fifth place and provides investors with a combination of capital preservation, income and inflation protection. Meanwhile, the Wellington Global Impact Bond fund, an income-oriented strategy that seeks to deliver a positive social and environmental impact, was the most researched Responsible Investment strategy for the third consecutive quarter.
There was a change in leadership of the most viewed fund groups over the quarter, with Jupiter Unit Trust Managers moving into pole position, accounting for 7.4% of all adviser views; First Sentier Investors, which had been most popular in Q4 2022, dropped down the ranks to fourth place. Baillie Gifford and Schroders remained in second and third place respectively.
Square Mile’s quarterly MI Report is an extensive register of viewing patterns among advisers using the Academy of Funds, a depository of insight and opinion on all 352 active, passive and risk targeted funds* rated by the company’s 20-strong team of analysts. In Q1 2023, there were 2,382 unique website visitors and 44,216 page views.
Square Mile’s Fund Dashboard, an interface through which advisers can access information across core fund selection criteria, saw the use of the ‘Opinion’ pillar as a primary access point neck and neck with ‘ESG’, accounting for 32.9% and 30.0% of visits respectively. They were followed by ‘Performance’ which was used 21.4% of the time. ‘Costs’ was the least used access point at just 5.7%. This suggests that advisers are less concerned by charges associated with
investing in funds, with an understanding of how a strategy seeks to deliver on its objectives, how it incorporates ESG considerations and its success in delivering on its objectives being significantly more influential over decision-making.
Equities were the most researched asset class over Q1 accounting for one in two visits to the Academy of Funds, double that of Fixed Income which, with 26.3%, was the second most popular. The IA UK All Companies sector maintained its place as the most viewed sector with a 11% share, down from 14% in Q4 2022. There was, however, a resurgence of interest in the IA Sterling Strategic Bond sector which regained its place as the second most viewed, up from fifth in the previous quarter with an increase of 3.6 percentage points to 10.8%.
Liontrust remained the most researched group offering risk-targeted strategies with just under a quarter of all views (23.1%). Rathbones, meanwhile, rose eight percentage points and moved into second place, pushing Premier Miton into third place. Among passive vehicles, abrdn Global Corporate Bond Tracker was the most researched, with a 4.8% share of views, with Vanguard LifeStrategy 80% Equity and L&G UK Index vying for second place with 4.2% and 4.1% respectively.
Jock Glover Strategic Relationships Director at Square Mile, said, “The first quarter of 2023 opened with concerns around recession and wound up with a perceived crisis in the banking sector, precipitated by the run on Silicon Valley Bank. Meanwhile, the war in Ukraine regrettably moved into a second year with a Sino-Russian axis increasing tensions with the West and heightening geo-political risk. Investor sentiment is undoubtedly shaky although the Investment Association reported net fund inflows over the first two months of the quarter as the ISA season gathered steam. Nonetheless, UK equities continued to see significant outflows, with savers withdrawing £1.6 billion in February alone.
“Despite this negative sentiment towards UK equities, it is interesting to note that two of the most popular strategies in the Academy of Funds invest in this asset class. Indeed, many UK equity managers consider the market to be offering particularly good relative value while offering access to both businesses with a global footprint as well as compelling opportunities further down the market cap scale. It is possible that advisers are increasingly warming to this view.”
See HERE to view a summary of the Q1 2023 Square Mile Market Intelligence Report.
