Square Mile’s quarterly Market Intelligence Report published today marked a reversal in adviser interest in funds targeting income and those with the potential of capital accumulation over the second quarter of 2024.
Income-related fund research had been in decline since Q3 2023, accounting for 32.0% of searches by Q1 2024, outstripped by capital accumulation which registered a 46.0% share. This trend was upended in Q2, with income funds once again being the most researched making up 44.2% of all searches, comfortably ahead of capital accumulation at 38.5%. Capital preservation and inflation protection as investment outcomes remained out of favour at 9.6% and 7.7%, respectively.
There was a significant shake up in adviser research into responsible investment funds, with the T. Rowe Price Global Impact Credit, Schroder Global Cities Real Estate and Wellington Global Impact funds moving into the top three positions for responsible fund research, accounting for 21.3%, 17.2% and 13.9% of searches respectively. The most viewed active fund overall was once again WS Havelock Global Select with a 15.8% share, while the Principal GIobal Investors Finisterre Unconstrained Emerging Market Fixed Income fund and Guinness Global Equity Income funds debuted in the top three with respective shares of 7.6% and 6.9%.
Boutique fund house Havelock also remained in pole position as most viewed fund group at 10.4%. However, with a 9.7%, share, Schroders was a close second, rising from fourth place in Q1 – an increase of 5.7 percentage points. T. Rowe Price was the third most popular with 8.5%, up 7.9 percentage points on the previous quarter. Liontrust was once again the most researched asset management company offering risk targetted strategies accounting for 21.0% of searches. However, Rathbones saw a strong 5.1 percentage point increase in views to 14.2%, placing it second and pushing HSBC Global Asset Management to third place with a 12.3% share.
There was also a shift in adviser interest in groups offering passive strategies. While, with a share of 29.5%, Vanguard remained most popular, this was a decrease of 10.5 percentage points on Q1. BlackRock’s share of views also fell, registering a drop of 6.8 percentage points and pushing it to third place, while Legal & General gained ground to second place accounting for 22.9% of searches.
The MI Report also saw a reordering at an IA sector level: IA Global grew its lead as most researched sector by four percentage points to 22.1%, however, IA Global Equity Income rose strongly from 10th place to second with a 13.8% share, an increase of 9.2 percentage points. IA UK All Companies dropped down to third place over the quarter accounting for an 8.7% share of views. The MI Report detected no change in the ranking of adviser interest in asset classes: equities maintained its lead as standout favourite at 62.0% (Q1: 60.0%), fixed income was level at 24.7% (Q1: 25.0%), multi-asset was slightly down at 12.8% (Q1: 14.2%), while interest in alternatives remained negligible at 0.5% (Q1: 0.8%).
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 380 active, passive and risk targeted funds and investment trusts* rated by the company’s team of 21 analysts. It provides an indication of sentiment among fund selectors towards investment outcomes, funds and fund groups and asset classes.
Scott Dakers, Business Development Director at Square Mile, said, “After several quarters of steady decline, it is interesting that our MI report revealed income producing strategies as once again gaining adviser attention. Moreover, that the IA Global Equity Income sector surged up the rankings to become the second most researched IA sector would suggest that fund selectors are seeking to diversify their exposure away from more traditional sources of income such as the UK market. Indeed, coupled with the fact that the IA Global sector was the most viewed overall, it would seem that advisers are preferring to delegate regional asset allocation decisions to fund managers with global mandates and who have the skillset to navigate a nuanced economic backdrop.
“Overall, the economic stage looks set to be supportive for both equities and fixed income assets. Nonetheless, events such as the US presidential elections, continued geo-political risk and a level of uncertainty over inflation and the direction of interest rates may unsettle jittery investors creating some short-term volatility. However, when investing it is important to remain focussed on the longer term, and the funds within the Square Mile Academy of Funds have been deemed by our team of analysts as being capable of consistently delivering on their stated objectives.”
