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Investment professionals turn eyes to Vanguard and UK stars at 2019’s start

04 February 2019

FE Trustnet gains some insight into the areas that advisers have been researching in the first month of 2019.

By Gary Jackson,

Editor, FE Trustnet

Financial advisers and other professional investors have started off the new year with more research into Vanguard’s multi-asset offering, global equities and respected UK funds, analysis by FE Trustnet shows.

With a difficult 2018 behind us, investors are looking forward to the coming year – which seems to have gotten off to a better start than might have been expected. While most indices posted losses in 2018, many made gains during January.

FE Analytics shows that the MSCI Emerging Markets index led January’s rally with a 5.31 per cent total return (in sterling terms), while the MSCI World – which covers developed markets – was up 4.35 per cent. The FTSE All Share gained 4.18 per cent.

 

Source: FE Analytics Market Intel Tool

Against this backdrop, we used the FE Analytics Market Intel Tool to discover what financial advisers, wealth managers and other investment professionals were researching more in January when compared with the previous 12 months. The above chart shows the change in research activity between these two periods on the Investment Association sector level.

IA Mixed Investment 40-85% Shares is the sector that attracted the largest increase in research activity during the month. The peer group – which was previously known as the ‘balanced’ multi-asset sector – is often popular with advisers, especially during times of market uncertainty.

This uncertainty is also reflected in the fact that the IA Volatility Managed sector benefited from the second largest uptick in research. Within this diverse sector (it is home to funds with varying risk tolerances), offerings from L&G, Standard Life Investments and Rathbones were more popular in January.

Investors were not avoiding pure equity funds, however, as evidenced by growing research in the IA Global, IA Japan and IA Global Emerging Markets sectors. That said, IA UK All Companies continued to fall in popularity and its share of research dropped by a significant margin.


If we look at individual funds, we see that Vanguard LifeStrategy 60% Equity was the product that captured the biggest increase in research activity in January when compared with the previous 12 months. It went from being the 16th most-researched fund on FE Analytics to the fourth.

The Vanguard LifeStrategy range is a suite of five multi-asset funds, which hold underlying Vanguard index trackers. They are automatically rebalanced to ensure they meet their particular risk targets and have proven to be consistently popular options with advisers since their launch in 2011.

Indeed, all five funds can be found among the 50 that increased their research share in January. Vanguard LifeStrategy 40% Equity came in third place, Vanguard LifeStrategy 80% Equity in fifth, Vanguard LifeStrategy 20% Equity ninth and Vanguard LifeStrategy 100% Equity was 13th.

 

Source: FE Analytics Market Intel Tool

Of the 50 funds growing their FE Analytics research share the most, IA Global members accounted for seven of them.

Fundsmith Equity, which is headed up by FE Alpha Manager Terry Smith, continued to be the most heavily researched fund during the month (a position it has held for some time) and was able to capture even more research share thanks to a very strong track record.

But Nick Train and Michael Lindsell’s Lindsell Train Global Equity is the IA Global fund that grew its research share by the greatest margin and edged its way from being the 86th most-researched fund overall to 44th place. The fund was the second best performer of its peer group in 2018, with its 11.07 per cent total return being beaten by Fidelity Global Health Care by just a few basis points.

Infrastructure also seems to be a popular area of global equities: Lazard Global Listed Infrastructure Equity, BNY Mellon Global Infrastructure Income and M&G Global Listed Infrastructure are three IA Global funds that were being researched more by professional investors.


Even though the IA UK All Companies sector witnessed a big drop in its share of research activity, it remains the most popular sector on FE Analytics. In January, its members accounted for 9.81 per cent of all research in the Investment Association universe (down from 10.75 per cent over the previous 12 months).

Some of the peer group’s members also managed to grow their individual research share during the first month of 2019, with Nick Train’s LF Lindsell Train UK Equity doing the best. This fund went from being the seventh most popular fund on FE Analytics to the third last month.

LF Lindsell Train UK Equity is top-decile in its peer group over one, three and five years, despite the fact that FE Alpha Manager Train rarely adds new stocks or sells holdings. The FE Invest team, which has the fund on its Approved List, said: “Achieving this impressive track record with the low portfolio turnover highlights his stockpicking skills.”

Liontrust Special Situations, TB Evenlode IncomeCFP SDL UK Buffettology and Polar Capital UK Value Opportunities are other respected IA UK All Companies members growing their FE Analytics research share in January.

 

Source: FE Analytics Market Intel Tool

When it comes to the funds that had the biggest falls in research activity, Aberdeen Corporate Bond tops the list. It was the 114th most viewed Investment Association fund in 2018 but slid down into 1,014th place last month.

Aberdeen as a whole had a lacklustre start to 2019 when it comes to adviser research, with Aberdeen Asia Pacific & Japan Equity, Aberdeen Asia Pacific Equity, Aberdeen Diversified IncomeAberdeen Ethical World Equity and Aberdeen European Equity being among those with the largest falls.

UK equity names being researched less on FE Analytics included Invesco High Income (UK)LF Woodford Equity Income and R&M UK Equity Smaller Companies.

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