There was a significant rise in the research that professional investors conducted on European equity funds in 2017 with Jupiter European replacing Standard Life Investments Global Absolute Return Strategies as the most popular fund. 
While Europe has been relatively unloved by investors in the decade since the global financial crisis, a strengthening economy, continued loose monetary policy and pockets of value mean the region has just had a strong year.
This was reflected in the research trends among the financial advisers, discretionary fund managers and other professional investors using FE Analytics. The FE Analytics Market Intel Tool allows us to compare how their research behaviour changed over 2016 and 2017.
In 2017, the IA Europe ex UK sector saw the largest increase in research when compared with the previous year; in 2016, the peer group accounted for 4.56 per cent of Investment Association research carried out through FE Analytics and this climbed to 5.31 per cent last year.
Changes in sectors’ research share between 2016 and 2017
Source: FE Analytics Market Intel Tool
With the eurozone debt crisis of 2011 fading in investors’ memories, sentiment was buoyed in 2017 thanks to a series of improving economic numbers and aggressive stimulus from the European Central Bank. While this stimulus has started to be scaled back, commentators think Europe is positioned for another strong year.
Chris Beauchamp, chief market analyst at IG Group, said: “The outlook for Europe remains strong, with eurozone economic growth expected to outperform next year. However, to a large extent it will also be tied to what Mario Draghi decides to do next.
“Lower inflation pressure means we anticipate the European Central Bank will continue to be dovish, which will ensure euro weakness and consequently stock outperformance. Eurozone equities also look set to profit from the carry trade benefits of the US dollar.”
The FE Analytics Market Intel Tool shows that other equity sectors being researched more by professional investors include IA North America, IA Global, IA Asia Pacific ex Japan and IA Global Emerging Markets. Within the multi-asset space, IA Mixed Investment 40-85% Shares, IA Flexible Investment and IA Volatility Managed received more attention when compared with the previous year.
But IA UK All Companies, IA UK Equity Income and IA Property funds were researched less heavily in 2017 than they were in 2016, likely because of the uncertainty that Brexit has created for the domestic market.
Turning to individual funds and the most researched on FE Analytics were some of the names that have been popular for the past several years – although there were big changes in their exact order of popularity.
The £4.8bn Jupiter European fund, which is headed up by FE Alpha Manager Alexander Darwall, has become the most popular fund with the investors researching through FE Analytics. This is the first time the fund has been the most heavily researched in a calendar year and it knocked Standard Life Investments Global Absolute Return Strategies off the top spot.
Jupiter European has a strong track record and is currently top decile in the IA Europe ex UK sector over one-, three-, five- and 10-year periods. It’s 27.71 per cent total return in 2017 was the second highest in the peer group, just beaten by the 28.35 per cent from LF Miton European Opportunities.
Other popular funds from across the Investment Association universe last year were Fundsmith Equity, LF Woodford Equity Income, Stewart Investors Asia Pacific Leaders, Invesco Perpetual High Income and Standard Life Investments Global Absolute Return Strategies.
These funds always tend to be heavily researched as they are some of the biggest in the industry and a common feature of client portfolios. However, we also wanted to see which funds have witnessed the biggest increase in adviser attention so we compared share of total research activity for 2016 and 2017.
Source: FE Analytics Market Intel Tool
As the table above shows, Jupiter European is also the fund with the biggest increase in research share. This was by quite a large margin, owing to the scale of it jumping from eighth place in 2016 to the top of the pack last year.
The rest of the list is a relatively mixed bag of funds, with Artemis US Select in second place. Managed by Cormac Weldon, the concentrated portfolio is build using a proprietary process that looks for upward drivers of stock prices, then assess where both the economic and market cycles sit.
Despite investors turning away from UK equities, Old Mutual UK Dynamic Equity – which is run by FE Alpha Manager Luke Kerr – has seen a big increase in interest from professional investors. The fund operates in a different way to many of its IA UK All Companies peers, taking long and short positions in UK stocks that are typically outside of the FTSE 100 index.
Certain bond funds also moved up the ranking despite asset class as a whole being out of favour. Allianz US High Yield, Pimco GIS Income, Natixis Loomis Sayles Multi Sector Income, GAM Star Credit Opportunities GBP and Schroder High Yield Opportunities are all examples of fixed income funds that have been getting more attention.
But which funds have seen the biggest drop-off in their share of total research on FE Analytics?
An unfiltered list of those with a lower research share in 2017 is dominated by funds from the IA Money Market and IA Short Term Money Market sectors. These were very popular in 2016 as investors worried about the Brexit referendum but have been getting less attention more recently.
Removing these funds from the ranking gives the below result. Standard Life Investments Global Absolute Return Strategies fell from being the most popular fund in 2016 to the sixth most researched last year, meaning it had the largest overall drop in research share.
This comes as the fund goes through a period of lacklustre performance. It aims to generate annual returns of 5 per cent above cash over rolling three-year periods but made just 2.34 per cent last year and endured a 2.68 per cent loss in 2016.
Source: FE Analytics Market Intel Tool
Following on from the Brexit result, UK property funds remain out of favour as Janus Henderson UK Property PAIF, Aviva Investors Property Trust, Aberdeen Property Trust and M&G Property Portfolio saw a decline in their share of research activity.
Likewise, big names in the UK equity space – including AXA Framlington UK Select Opportunities, Invesco Perpetual High Income, Neptune UK Mid Cap and Standard Life Investments UK Equity Income Unconstrained – were researched less heavily in 2017 than they were in the previous year.