Liontrust Special Situations, Franklin UK Equity Income and Jupiter UK Smaller Companies are among the UK equity funds that have witnessed an increase in adviser research activity during the opening four months of 2017, research by FE Trustnet shows. 
In an article in this month's issue of FE Professional, we looked across the entire Investment Association universe to find out which funds are witnessing higher levels of professional investor interest this year when compared with 2017.
However, we will take a more focused approach in this article and only look at the beneficiaries from the IA UK All Companies, IA UK Equity Income and IA UK Smaller Companies sectors.
To do this, we used the FE Analytics Market Intel tool to determine each funds' proportion of total research activity from the professional investors using FE Analytics. We compared the proportions for 2016 with the first four months of 2017 to discover which funds saw the biggest increases in interest, adding a further filter for those that have been researched more than 500 times this year.
When it comes to the IA UK All Companies sector, which is the largest peer group in the Investment Association universe, the fund with largest uptick in research activity is Liontrust Special Situations.
Performance of fund vs sector and index since launch
Source: FE Analytics
This £2.7bn fund, which is headed up by the FE Alpha Manager duo of Anthony Cross and Julian Fosh, has a strong track record and has beaten its average peer and the FTSE All Share by a wide margin since launch in 2005 – as shown in the above chart.
Indeed, the fund was highlighted in a recent FE Trustnet study that compared funds for their cumulative five-year returns to the end of 2016, those for the three most recent individual calendar years, volatility, maximum drawdown, alpha generation, Sharpe ratio, downside capture and upside capture.
In this research, the five FE Crown-rated fund – which is essentially a ‘best ideas’ fund of Fosh’s large-cap mandate and Cross’ small- and mid-cap portfolio – was ranked third in its peer group for consistently being in the upper decile on the 10 above metrics.
The next nine funds seeing the biggest rise in interest on FE Analytics are Jupiter UK Special Situations, Aberdeen UK Equity, Standard Life Investments UK Ethical, CFP SDL UK Buffettology, Liontrust Sustainable Future UK Growth, R&M UK Equity High Alpha, Lazard UK Omega, JOHCM UK Dynamic and Rathbone Recovery.
One thing that stands out is how there appears to be more interest in funds with a value or recovery approach to investing; Liontrust Special Situations, Jupiter UK Special Situations, R&M UK Equity High Alpha, JOHCM UK Dynamic and Rathbone Recovery all fit under this banner.
Turning our attention to the IA UK Equity Income sector and the fund most increasing its share of adviser research activity is Franklin UK Equity Income.
Performance of fund vs sector and index over 10rys
Source: FE Analytics
Colin Morton is the lead manager of the £383.5m fund, with FE Alpha Manager Ben Russon and Mark Hall acting as deputies. This is another fund with a strong track record of outperformance and when we looked at the IA UK Equity Income sector and compared funds on the 10 metrics mentioned previously, Franklin UK Equity Income was in tenth place.
The five FE Crown-rated fund is managed with a focus on valuations with Morton preferring companies that he expects to pay a high level of dividend and trade at a low valuation relative to the market.
The FE Invest team said: “Similar to a lot of income funds, the Franklin UK Equity Income fund does provide the necessary income as it says on the tin. However, this fund differs in that the discipline across the team to dividend yield and bottom up fundamentals leads it to appear as contrarian in comparison to its peers.”
Other UK equity income funds seeing the biggest increase in their share of research activity include Unicorn UK Ethical Income, Aberdeen UK Equity Income, F&C Responsible UK Income, SJP Allshare Income, R&M UK Equity Income, Investec UK Equity Income, SJP Equity Income, SJP UK & International Income and SJP UK & General Progressive.
The IA UK Smaller Companies fund benefiting from the biggest uptick in research interest, according to our research, is Jupiter UK Smaller Companies. This £110m fund has been managed by James Zimmerman since June 2015 and has significantly outperformed the sector and index since.
Zimmerman invests in high-quality companies where he sees the potential for “significant growth” over the medium to long term. The 58-stock portfolio is currently headed up by laser-guided equipment manufacturer Somero Enterprises, followed by delivery service Ocado and computer gaming platform developer Quixant.
Performance of fund vs sector and index under Zimmerman
Source: FE Analytics
The sector members seeing the next biggest increases in adviser interest are Liontrust UK Micro Cap, TB Amati UK Smaller Companies, MI Downing UK Micro-Cap Growth, Castlefield UK Smaller Companies, Schroder UK Dynamic Smaller Companies, Lazard UK Smaller Companies, Aberdeen UK Smaller Companies Equity, Aviva Investors UK Smaller Companies and Royal London UK Smaller Companies.