While the ever popular £21.3bn M&G Optimal Income fund, which is headed up by FE Alpha Manager Richard Woolnough, has been the best-selling fund overall with inflows of £2.9bn, our data shows the extent to which “bricks and mortar” property has increased in popularity in recent months.
The market movement tool on FE Analytics shows that Henderson UK Property has grown by £600m to £1.9bn, M&G Property Portfolio by £436m to £2.9bn and SWIP Property Trust by £326m to £3bn.
Source: FE Analytics
All of the figures show how much money the funds have taken in the six months to the beginning of July.
As FE Trustnet recently highlighted, several leading multi asset managers have been upping their exposure to the IMA Property sector over the last 12 months.
The large majority of them have been looking for an alternative to traditional bond funds, which face an uncertain future given the inevitable rise of interest rates.
The recent surge in the performance of direct property portfolios has been in direct contrast to gilts, which have endured a difficult time over the past 18 months or so.
An FE Trustnet article also highlighted than property funds have paid out more in the way of dividends over the past three years.
Performance of composite portfolio vs sector over 3yrs
Source: FE Analytics
Investors who have bought into the SWIP, M&G and Henderson property funds have been well-rewarded recently, with the three portfolios returning 6.3 per cent, 6.28 per cent and 4.91 per cent over the past six months, respectively.
All have therefore outperformed the large majority of UK equity funds.
Fiona Rowley’s M&G Property Portfolio has the highest yield of the three at 40.8 per cent, while Marcus Langlands Pearse and Ainslie McLennan’s Henderson UK Property fund yields 3.7 per cent and Gerry Ferguson’s SWIP Property Trust yields 3 per cent.
Though the experts tend to agree that the outlook for bonds is difficult, GLG Strategic Bond is one portfolio which has attracted a lot of interest, growing by £578m so far in 2014.
The now £755m fund, which is headed up by Jon Mawby and Andy Li, has been the tenth best performer in the IMA Sterling Strategic Bond sector since its launch in November 2011, with returns of 34.37 per cent.
The fund currently yields more than 4 per cent.
There are a number of equity income funds which have made this year’s best-sellers list, one being Martin Cholwill’s Royal London UK Equity Income fund.
According to FE Analytics, the five crown-rated fund has grown by £455m so far this year to £1.3bn.
It has been one of the most consistent performers in the IMA UK Equity Income sector, outperforming the average in seven of the last eight calendar years since Cholwill’s appointment in March 2005.
Cumulatively, Royal London UK Equity Income has been the third best performing fund in the sector since he has been at the helm with returns of 135.64 per cent, beating its benchmark – the FTSE All Share – by more than 35 percentage points.
Performance of fund vs sector and index since Mar 2005
Source: FE Analytics
Much of the money pouring out of the Invesco Perpetual Income and High Income funds as a result of Neil Woodford’s departure has undoubtedly gone into CF Woodford Equity Income, but it seems like Cholwill has been one of the biggest beneficiaries elsewhere.
Diversifying UK exposure has also proven to be a popular strategy among investors, with IMA Global Equity Income funds such as Threadneedle Global Equity Income and Artemis Income both featuring high up on the best-sellers list.
Other funds to have attracted large amounts of inflows in 2014 include Richard Buxton's new Old Mutual UK Alpha fund, Terry Smith’s Fundsmith Equity fund and FE Alpha Manager Ariel Bezalel’s Jupiter Strategic Bond fund, which is seen as a direct alternative to Woolnough’s Optimal Income portfolio.
The most notable absentee from the study is star manager Neil Woodford’s CF Woodford Equity Income fund, which launched to great fanfare last month, raising £1.6bn worth of assets in its initial offer period.
It has been the second best-selling fund in the IMA universe this year, but the market movement tool only includes funds that have at least a six month track-record.
Unsurprisingly, it’s Woodford’s previous ventures that have shed the most amount of money in 2014.
According to FE Analytics, the now £7.2bn Invesco Perpetual Income and £13.1bn High Income funds – which are both now headed up by FE Alpha Manager Mark Barnett – have shrunk by £2.4bn and £1.1bn so far in this year, respectively.
Barnett recently told FE Trustnet that those redemptions have actually benefitted him as he has been able to make his own mark on the multi-billion pound portfolios.
Despite the outflows, both of his funds have been top quartile performers in their respective IMA sectors so far in 2014.
M&G Global Basics is another high-profile fund to have made the worst-sellers list, with Graham French’s departure last year and period of underperformance both undoubtedly contributing to its £508m outflows over the last six months Randeep Somel’s now £3.1bn fund made it onto Bestinvest’s Spot the Dog survey, which was released this weekend, due to its poor return’s relative to the IMA Global sector.
Our data shows that though M&G Global Basics has been a top quartile performer over 10 years, it delivered bottom quartile returns in 2011, 2012 and 2013.
The fund is currently underperforming against the sector in 2014, and has been one of the worst performing portfolios in the sector over three years with losses of more than 6 per cent.
Performance of fund vs sector over 3yrs
Source: FE Analytics
The fund has historically had a high weighting to emerging markets and commodity-related equities; two areas of the market which have been particularly out of favour over recent years.
On the subject of developing world equities, First State Global Emerging Markets Leaders and Aberdeen Emerging Markets Equity, which are historically the most popular choices in the IMA Global Emerging Markets sector, have also made it onto the worst-sellers list.
Jonathan Asante’s five crown-rated First State fund has shrunk by more than £500m this year, while the Aberdeen fund has shed £440m.
Given their size, it’s unsurprising these are the IMA Global Emerging Market funds that have borne the brunt of the declining sentiment towards the asset class in recent months.
Early indications suggest some investors may have sold out at the worst possible time, with both multi-billion portfolios delivering strong returns this year and beating their peer group.
Like the Invesco funds, Threadneedle American and Threadneedle American Select have suffered from a star manager departure. Cormac Weldon and his team’s move to Artemis has coincided with more than £800m coming out of the now £1.4bn Select fund, and £400m coming out of the now £1.8bn American fund.
Looking at the best-selling trackers list, Blackrock’s CIF UK Gilts Tracker, CIF Continental European Tracker, CIF North American Tracker and the Vanguard US Equity Index fund have proven very popular in recent months, attracting between £450m and £900m and over the past six months.
