There has been a significant uptick in advisers researching capital preservation strategies, according to Square Mile.
Its quarterly Market Intelligence Report showed searches for funds with a focus on capital preservation rose by 12.2% in the fourth quarter of 2024, accounting for almost a fifth (18%) of searches, up from 6.6% in the third quarter.
While capital accumulation and income remained the most researched outcomes at 39.6% and 37.5% respectively, their overall share dropped from 45.9% and 42.6%. However, the five most researched funds in the fourth quarter were either growth or income strategies, the data showed, with the WS Havelock Global Select fund topping the list once again, with a 16.8% share. It was followed by the Aegon Diversified Income fund (4.6%) and Jupiter Merlin Growth Portfolio (3%).
Inflation protection accounted for the fewest searches at 4.2%, suggesting that advisers no longer consider inflation to be a significant threat to client portfolios, Square Mile said.
The data showed equities were the most viewed asset class, with their share increasing from 56.6% to 59.4%. In contrast, views of fixed income dropped 7% to 18.2%, putting it in third place after multi-asset, which jumped from 17.3% to 20.6%.
Sector-wise, IA Global remained the most popular, accounting for 13.4% of searches, closely followed by IA North America and IA UK All Companies, which both registered an 11.9% share.
Among asset management companies offering risk targeted solutions, Liontrust was the most researched (19.8%), climbing from third place in the previous quarter.
Meanwhile, Vanguard remained the most popular passive investment house, despite its share of views falling by 22% to 25.6%. Legal & General rose to second place with 22.7%, an increase of more than 10% on the previous quarter.
Square Mile said its data also showed a shake up in the most researched responsible investment funds. The M&G Positive Impact fund, the most viewed in the third quarter, fell to 17th place in the fourth quarter. Instead, Royal London Sustainable World Trust and Wellington Global Impact Bond fund, both rose to pole position (4.7%), while the Edentree Responsible and Sustainable Short Dated Bond fund came in at third place (4.2%).
Scott Dakers, senior business development director at Square Mile, said: “At a macro level, there was plenty to keep fund selectors occupied in the final quarter of 2024, with Trump’s resounding victory in the race to the White House and Labour’s inaugural Budget heightening market noise on either side of the Atlantic. It is therefore unsurprising that the IA North America and IA UK All Companies were among the most researched sectors over Q4. However, the resurgence of interest in capital preservation strategies perhaps suggests that advisers are beginning to consider positioning client portfolios more defensively.”
Dakers said markets continue to rise with both the S&P 500 and FTSE 100 surging ever higher, but the impact of the Trump administration and its threat of wide-reaching tariffs and the effect of increases in employer National Insurance contributions present some uncertainty.
“Whether the coming months witness a broadening out in markets, so long dominated by mega cap tech stocks, the resurgence of small and mid-caps, a return of fund flows to the UK, 2025 looks set to be an extraordinary year for fund managers and selectors, alike,” he added.
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