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Professional investors turn to Vanguard, Fundsmith and Lindsell Train in March

01 April 2019

We find out which funds became more popular with professional investors using FE Analytics in March.

By Gary Jackson,

Editor, FE Trustnet

Financial advisers and other professionals continued to increase their research in passive multi-asset funds last month, although there is still growing interest in managers with a resolutely active approach.

In contrast to the final quarter of 2018, the opening months of the new year have been relatively strong ones with equity markets in most parts of the globe posting positive returns and extending the 2019 rally.

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 March when compared with the previous 12 months.

 

Source: FE Analytics Market Intel Tool

The above chart shows how each Investment Association sector’s share of total FE Analytics research changed between these two periods.

The findings back up the results of research such as the Bank of America Merrill Lynch Global Fund Manager Survey, which suggested that asset allocators appear quite cautious in the ongoing bull run and trimming risk.

As can be seen, the sector that benefitted from the largest uptick in research interest last month was IA Sterling Strategic Bond, where members have a great deal of flexibility in how they take exposure to fixed income assets.

The IA UK Equity Income and IA Global Equity Income sectors – which saw the second and third largest increases in their research share – also tend to focus on more defensive areas of the market, given their search for stable, dividend-paying business.

And the sector in fourth place, IA Targeted Absolute Return, is made up of members that have the aim of generating a positive total return regardless of market conditions.


While things appear quite cautious on a sector level, professional investors were not fleeing risk completely when we look at the individual funds that benefitted from growing levels of research on FE Analytics in March.

The fund with the biggest increase in its research share was Vanguard LifeStrategy 60% Equity, which resides in the IA Mixed Investment 40-85% Shares sector. Two of its stablemates – Vanguard LifeStrategy 40% Equity and Vanguard LifeStrategy 80% Equity – can also be found in the top 10 list.

The Vanguard LifeStrategy range is a suite of multi-asset funds that are built from individual Vanguard index trackers. While they have been popular options with financial advisers since launch, their popularity seems to have been growing even more in recent months; they were also being researched more heavily when we did this study in January and February.

 

Source: FE Analytics Market Intel Tool

As well as passive funds, there was an uptick in research around tried-and-tested active managers, with Fundsmith Equity being the active fund capturing the greatest increase in FE Analytics research share last month.

This £17.5bn fund is headed up by FE Alpha Manager Terry Smith and is the most heavily viewed fund on FE Analytics when we look at the number of research hits alone.

Analysts at Square Mile, which gives Fundsmith Equity an ‘AA’ rating, said: “This fund has many qualities. It benefits from a charismatic manager who together with Fundsmith's head of research, Julian Robins, has developed a product that has a clearly defined philosophy and process, and in our opinion, seeks to deliver an achievable objective. Equally, the types of companies held are those that many investors can relate to, for most will be household brands providing every day goods and services.”


Other well-respected active funds that professional investors were researching more in March include Lindsell Train Global Equity and LF Lindsell Train UK Equity.

Like Fundsmith, Lindsell Train has an investment philosophy that concentrates on the highest quality companies in a select number of industries, with the aim of building a long-term, concentrated portfolio.

Liontrust Special Situations, TB Evenlode Income, Newton Global IncomeCFP SDL UK Buffettology and Franklin UK Equity Income are also funds that take an active approach and have won more FE Analytics research in March.

 

Source: FE Analytics Market Intel Tool

As we saw in the first chart, the IA UK All Companies is the peer group that was hit with the biggest fall in its share of research on FE Analytics last month. This has been an ongoing theme since the UK voted to leave the EU in 2016.

IA Global Bonds, IA Asia Pacific Excluding Japan, IA Flexible Investment and IA Global Emerging Markets Bond were other peer groups that advisers and other professionals were less interested in last month.

In terms of individual funds, Aberdeen Corporate Bond suffered the largest drop in research share. The fund is one of the largest members of IA Sterling Corporate Bond sector, with assets of £1.3bn.

Other notable funds that received less research on FE Analytics in March include Fidelity Special Situations, Invesco Global Targeted Returns (UK) and Standard Life Investments Global Absolute Return Strategies.

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