Advisers turned their attention equally to funds which aim to deliver capital accumulation as to those with the promise of income, according to Square Mile’s MI report for the final quarter of 2024.
These two outcomes each accounted for 40.6% of adviser searches via the Square Mile Academy of Funds, representing a slight cooling of interest in income strategies (46.7% in Q3) and an uptick for capital accumulation (33.3% in Q3).
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 370 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.
According to the MI Report, there was a major shift in adviser research into individual funds over Q4. Among strategies with an explicit responsible investment mandate, interest in the BlueBay Impact Aligned Bond fund increased considerably relative to the previous quarter. With a 5.8% share of all views, it was the most viewed responsible fund, moving up to pole position in Q4 from 17th place in Q3. The Edentree Responsible and Sustainable Short Dated Bond fund came in second, up from 13th place in Q3 and accounting for 5.0%, level pegging with Wellington Global Impact Bond, previously the most researched strategy.
There was also a wholesale change in the mainstream strategies occupying the top three positions. The Aegon Diversified Monthly Income fund was the most researched fund over the quarter, moving up from eighth place in Q3 and accounting for 3.5% of all views, an increase of 1.7 percentage points. This was followed by WS Amati UK Listed Smaller Companies fund which had a 2.6% share boosting it from 12th place in Q3 to second place in Q4, and abrdn Liquidity Sterling fund at 2.2% (2.1% in Q3).
There was also a change in leadership in the most researched fund groups with Schroders regaining its position as most viewed, moving up from fourth place in Q3 and accounting for 4.9%. Schroders was closely followed by Aegon Asset Management which had a 4.8% share of views, an increase of 1.9 percentage points, the largest uptick across all fund firms, moving it from 10th position in Q3 to second place. Meanwhile, Jupiter maintained its position as the third most research group with 4.5% of all searches.
Square Mile’s Fund Dashboard, an interface through which advisers can access information across core fund selection criteria, saw a considerable surge in use of the ‘Opinion’ pillar as a primary access point at 45.3%, up from 19% in Q3. ‘Costs’ also saw an increase as a research theme, moving from the least accessed pillar in Q3 to third place in Q4 with a 14.7% share, up from 8.6%. Meanwhile, ‘Performance’, the most used pillar in the last quarter, dropped down to second place with 28%, whilst ‘Risks’ also registered a decline of some 10 percentage points, dropping from 19% in Q3 to 9.3% in Q4.
At an IA sector level, IA UK All Companies regained first place with a 11.8% share followed by IA Sterling Strategic Bond at 10.4%. IA Targeted Absolute Return, which contains a number of multi-asset strategies, maintained its position in third place with an 8% share, a decrease of 2.8 percentage points relative to Q3. There was, however, little variance in adviser interest in asset classes with views remaining broadly unchanged relative to the previous quarter: equities continued to be the standout favourite at 53.6%, fixed income at 26.0%, multi-asset at 19.4%, with negligible interest in alternatives at 1%.
Among fund groups offering risk targeted strategies, HSBC Global Asset Management saw a significant increase of 13.1 percentage points. Accounting for one in four of all searches, it was the clear leader and comfortably ahead of its nearest rival, Legal & General Unit Trust Managers which had an 18.3% share, an increase of 2.7 percentage points on Q3. Liontrust, however, dropped down from pole position in Q3 to third place over the last quarter at 17.7%, a decrease of 8.8 percentage points. Looking at groups offering passive investments, Legal & General was also the most popular at 22%, followed by abrdn which moved up to second place with 17.2% – an increase of 2.1 percentage points – pushing Vanguard to third place with 14.8%.
Scott Dakers, Business Development Director at Square Mile, said, “The last quarter witnessed a considerable sea change in the patterns of adviser research via the Square Mile Academy of Funds. Interestingly, the most researched responsible funds over the last quarter were all fixed income strategies. Historically, the responsible investment field was dominated by funds investing in equities and this shift perhaps reflects the greater diversity of options available and the maturity of responsible investment as a whole.
“It is also interesting to note that advisers are putting greater emphasis on the ‘Opinion’ element of our analysts’ research, over and above ‘Performance’. This could be indicative of the fact that strategies that have performed well over the last year or so, may face some headwinds given an uncertain economic backdrop leading fund selectors to value qualitative assessments of how a fund is likely to hold up in differing market backdrops more highly. Meanwhile, the UK, which has been unloved by asset allocators for several years, saw an increase in interest with IA UK All Companies being the most researched IA sector, possibly suggesting a shift to a more positive sentiment towards our domestic market.”
