Advisers on the panel of the FE Adviser Fund Index (AFI) are recommending a shift into cautious asset classes such as fixed interest and away from emerging markets and other international equities, according to the data from the latest rebalancing of the portfolios.  

The FE indices collect the fund and asset allocation recommendations of a panel of industry experts, meaning that they track the sentiment and opinions of investment professionals about funds and sectors.

The most adventurous of the three AFI indices, the AFI Aggressive Index, slashed its exposure to the Asia Pacific region by 25 per cent since the last rebalancing six months ago, while the AFI Balanced Index reduced its exposure to international equities by 7 per cent.

Oliver Clarke-Williams, investment product consultant at FE, said: “Across the board, advisers are taking risk off the table and the three FE AFI indices have converged closer together than in previous rebalancings.”

“We have seen a reversal of the trend which saw advisers reduce their exposure to corporate bonds in the November 2011 rebalancing. All indices have seen inflows into this asset class, suggesting that corporate debt is perceived as the nearest thing to a safe haven in these turbulent times.”

AXA Framlington UK Select Opportunities was advisers’ top fund pick for aggressive investors and made it into the top three fund choices for the other indices. M&G Optimal Income was the favourite for both Balanced and Cautious investors.

AXA Framlington UK Select Opportunities, managed by FE Alpha Manager Nigel Thomas, is in the top quartile of the IMA UK All Companies sector over one, three, five and ten year periods, having returned 208.05 per cent to investors over a decade.

Performance of fund versus sector over 10yrs



Source: FE Analytics

M&G Optimal Income has made 60.17 per cent to investors over five years, top quartile returns for the IMA Sterling Strategic Bond sector.

Performance of fund versus sector over 5yrs



Source: FE Analytics

The fund is managed by FE Alpha Manager Richard Woolnough, who gave his view on the outlook for the markets to FE Trustnet last month. 

The panel selecting the AFI portfolios has been boosted by the addition of Mark Wright, investment analyst at AFH Wealth Management, and Alex Brandreth, deputy fund manager at private bank Brown Shipley.

The indices are rebalanced twice a year and this latest review, effective 1 August 2012, marks their 16th season.