With a ‘no deal’ Brexit looking to be a strong possibility, investors are likely feeling anxious about how to position their portfolios. In light of this, we have used FE’s unique Market Intel (MI) tool to see which Investment Association (IA) funds and sectors advisers have been researching recently, as well as the period leading up to the referendum and the two years since (July 2015 to July 2018).
UK Equity funds have consistently been the most researched funds in each of the last three years. Funds from the UK All Companies and UK Equity Income sectors have made up a combined total share of between 18% and 28% in each of the last three years as well as in the three-month period from May to July 2018.
Charles Younes, FE research manager, says: “This focus on UK Equities is likely down to two main factors. Both advisers and investors often feel more comfortable investing in their home market over others purely because it is familiar. However, Brexit induced volatility will also have been a big factor as investors mulled over their asset allocations.”
What’s happening at the top? – Standard Life GARS slips further
Standard Life GARS has continued its slide down the list of most researched funds. The fund had been a mainstay of the top five since launch in 2008 but negative performance has seen it drop to ninth place this year.
Meanwhile, Fundsmith Equity maintained its place in the top five most researched in each of the last three years (July 2015 to July 2018). Woodford Equity Income has retained a top three spot over the same period.
Younes comments: “The fact that Standard Life GARS has slipped further down the list is unsurprising when looking at the poor performance recorded by the fund over the last three years. The fund is about to record another year of negative performance; the last time being in 2016; which leaves the performance significantly below its target of cash + 5% over a rolling three-year period and since inception. The fund has also recorded outflows, as investors looked to alternatives such as JPM Global Macro Opportunities, Invesco Perpetual Global Targeted Absolute Return and Aviva Multi Strategy Target Returns.”
North America on the up
North American funds have also been gaining more interest from advisers. Over the last three years (July 15 to July 18), the number of IA North America funds in top 50 most researched funds has increased from one to four. Two stand out funds are Artemis US Select, which has made its first appearance in the top 50 in the last year coming 16th in the list, and Old Mutual North American Equity, which has also shot up the list from 40th to 28th (2016/17 to 2017/18).
Tanvi Kandlur, FE fund analyst, comments: “US equities continue to outperform European, Japanese, UK and Emerging market equities so far in 2018. Specifically, Artemis US Select is a good option to get exposure to core US equities and manager Cormac Weldon takes a flexible approach. Old Mutual North American Equity takes a quantitative and dynamic approach, employing a blend of factors including growth, value momentum and quality, which will vary depending on market conditions.
“In the US, growth has been outperforming value consistently for over 18 months; and most growth stocks, notably the FAANGs (“Facebook, Apple, Amazon, Netflix and Alphabet’s Google”) appear expensive and represent an increasingly large proportion of the index. It may be that advisers are wary of sharp market rotations and are increasingly researching flexible funds that have the potential to outperform irrespective of the style that the market favours.”
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