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Professional investors keep eyes on Asia and ESG in June

01 July 2020

Trustnet finds out which funds the professionals were researching in June, as markets continued to recover from the coronavirus crash.

By Gary Jackson,

Editor, Trustnet

Funds that invest in Asian equities and those that specialise in responsible investment were of greater interest to professional investors last month, Trustnet analysis suggests.

In this regular series, Trustnet identifies the recent fund research trends of the independent financial advisers, wealth managers and other professional investors who use FE Analytics.

To do this, we examine the change in the share of research that each fund has received over the past month compared with a ‘baseline’ from the previous 12 months.

After collating funds by their Investment Association sector, it is clear that there was a big uptick in interest in IA Asia Pacific Excluding Japan funds in June.

Change in sector research in Jun 2020

 

Source: FE Analytics Market Intel Tool

Over the 12 months to the end of May 2020, the IA Asia Pacific Excluding Japan sector accounted for 3.23 per cent of all research carried out into the Investment Association universe but this jumped to 4.38 per cent in June.

The sector has performed strongly over the past month, with its average member posting a total return of 7.87 per cent. This makes it the second highest returning fund sector, after IA China/Greater China’s 10.23 per cent gain.

While Asia was the region to be first hit by the coronavirus pandemic, it had more experience than the West in dealing with such outbreak after its previous brushes with the likes of SARS and came out of lockdown first.

The IMF also expects the region’s economy to be much stronger than the developed world; its latest estimates say emerging Asia’s GDP will contract by 0.8 per cent this year, compared with a 8 per cent fall for developed economies.

Schroder Asian IncomeBNY Mellon Asian Income and Schroder Asian Alpha Plus are the most researched members of this sector, but the funds with the biggest increase in their research share were Guinness Asian Equity IncomeFidelity Asian Special Situations and Baillie Gifford Pacific.

Turning to individual funds and it was Baillie Gifford Positive Change that benefitted from the biggest increase in FE Analytics research in June – a position that it also held in May.

 

Source: FE Analytics Market Intel Tool

The fund invests in companies that can deliver positive social change in one of four areas: social inclusion and education, environment and resource needs, healthcare and quality of life, and base of the pyramid, or addressing the needs of the world's poorest populations.

Baillie Gifford Positive Change’s recent performance has been very strong. Its 32.56 per cent total return in 2020 so far is the third highest in the IA Global sector (where the average member is down 0.07 per cent). It’s also the peer group’s second best fund over one and three years.

This performance, alongside inflows, means the fund’s asset under management have climbed from less than £200m at the start of 2020 to around £700m today.

In May’s article on research trends, Trustnet noted how many of the funds that are being looked at more often were, like Baillie Gifford Positive Change, those with an environmental, social, and governance (ESG) approach.

This trend remained in play during June as a notable amount of the funds that were being researched by professional took this approach.

These included Royal London Sustainable Leaders Trust, Kames Ethical Corporate Bond, Unicorn UK Ethical Income, Royal London Ethical Bond, Rathbone Ethical Bond, Premier EthicalStewart Investors Asia Pacific Sustainability and EdenTree Amity UK.

However, the above list shows that some fund groups also seem to have benefited from more attention in FE Analytics.

Of the 30 funds we’ve shown in the table, five are run by Baillie Gifford. This firm has a strong long-term track record and many of its funds are currently in the top quartile of their respective peer groups over one, three, five and 10 years.

Royal London also has four funds on the above list, a reflection of its own strong track record when it comes to ESG investing.

Guinness Global Equity Income is the fund with the second highest increase in its FE Analytics research share in June. This is another fund that is in the top quartile of its sector in 2020, as well as over cumulative one-, three- and five-year periods.

Allianz Strategic Bond is in third place. This is another fund that has delivered high returns this year – it’s 25.83 per cent return is well above the 0.97 per cent made by its average peer and it’s the highest returning strategic bond fund over one, three and five years.

 

Source: FE Analytics Market Intel Tool

The above list shows the funds that had the biggest falls in their research share on FE Analytics last month.

Topping it is Invesco High Income (UK), which has suffered a run of lacklustre performance and outflows in recent years. Manager Mark Barnett, who took over the fund from Neil Woodford, recently resigned from Invesco.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.