The IA Sterling Strategic Bond sector was the best-selling sector in May, when the Investment Association (IA) recorded the fourth highest month of net retail sales on record.
Fund inflows from retail investors reached £3.6bn during the month, with the IA Sterling Strategic Bond sector enjoying net retail sales of £392m.
The IA Sterling Strategic Bond sector took in £100m more than the second-placed IA Global with £292m, while IA Europe ex UK funds attracted net inflows of £290m.
Fourth-placed IA Japan sector gained £251m in fresh money, while the fifth-placed IA Sterling Corporate Bond sector generated sales of £230m.
Source: Investment Association
Conversely, the Investment Association’s largest sector, IA UK All Companies, reported net outflows of £532m.
The asset manager trade body reported that May’s strong monthly showing had contributed to net retail sales of £15.3bn for the first five months of the year.
Alastair Wainwright, fund market specialist at the Investment Association, said: “For the third month in a row, all asset classes have received positive net retail flows.
“UK retail investors allocated £1bn to equity, with global equity funds once again receiving the majority of net equity flows and having the best-selling fund in this month.”
Below, FE Trustnet explores the most researched funds by FE Analytics users during the first half of 2017 from the best-selling sectors.
IA Sterling Strategic Bond
The IA Sterling Strategic Bond sector had another stellar month, having attracted £376m in net flows during April. The second largest fixed income sector, it now has total assets of £40.4bn.
During the first half of the year, the average sector fund returned 3.3 per cent, compared with a gain of 7.33 per cent in 2016.
Source: FE Analytics Market Intel Tool
As the above table shows, Jupiter Strategic Bond was the most researched fund of the first half of the year. Managed by FE Alpha Manager Ariel Bezalel, the £3.7bn fund targets a high income with the prospect of capital growth, by investing in higher yielding assets.
Performance of fund vs sector over H1
Source: FE Analytics
The fund has delivered a 3.12 per cent return, slightly below the average sector fund and has a yield of 4.1 per cent.
Also included in the top 10 most researched funds was the £18.5bn M&G Optimal Income fund, overseen by FE Alpha Manager Richard Woolnough and deputy manager Stefan Isaacs.
Other notable funds included the FE Alpha Manager Ian Spreadbury’s £1.8bn Fidelity Strategic Bond fund, John Pattullo and Jenna Barnard’s Henderson Strategic Bond and the five FE Crown-rated Royal London Ethical Bond fund, run by Eric Holt.
IA Global
The IA Global sector was the second most Investment Association sector in May. Global equities as a whole attracted £292m out of total net retail sales of the £1bn taken by equity funds in the month.
During the first half of the year, the average IA Global fund returned 7.08 per cent.
Source: FE Analytics Market Intel Tool
Terry Smith’s much-loved Fundsmith Equity fund was the most popular fund in the sector during the first half. The FE Alpha Manager’s five crown-rated fund was also a top performer during the first half of the year, recording a 13.4 per cent gain, compared with a 5.27 per cent rise in the MSCI World index benchmark.
The £11.3bn fund invests in high quality companies with a long-term investment outlook. It has a concentrated portfolio with just 30 holdings, including several global brands, such as Microsoft, Paypal, Pepsico and Intercontinental Hotels.
Performance of fund vs sector & benchmark over H1
Source: FE Analytics
The second most-researched fund was First State Global Listed Infrastructure, a popular pick among income investors. The five crown-rated fund is managed by FE Alpha Managers Peter Meany and Andrew Greenup and has delivered an 8.16 per cent return during the first half of the year.
Other notable funds include the Rathbone Global Opportunities fund overseen by FE Alpha Manager James Thomson and Sammy Dow, FE Alpha Manager Jeremy Podger’s Fidelity Global Special Situations and the five crown-rated M&G Global Basics.
IA Europe ex UK
European equities have continued to gain support more recently as US stocks look increasingly overpriced and uncertainty over the UK persists.
The sector was one of the top performers during the first half of the year, having returned 12.92 per cent.
Source: FE Analytics Market Intel Tool
The sector’s most researched fund was Jupiter European, overseen by FE Alpha Manager Alexander Darwall and holding five FE Crowns.
During the first six months of 2017, the fund returned 17.48 percent compared with a 13 per cent gain for the FTSE World Europe ex UK index benchmark.
Darwall targets long-term capital growth and has generated a return of 123.43 per cent over five years against a 103.48 per cent rise for its average peer.
Performance of fund vs sector & benchmark over H1
Source: FE Analytics
The five crown-rated BlackRock European Dynamic fund managed by FE Alpha Manager Alister Hibbert was the second most-researched fund, it was up by an impressive 17.51 per cent over the first half.
Five crown-rated sister fund BlackRock Continental European Income was third-placed, while another top-rated fund, Schroder European Alpha Income, was fourth placed. The Threadneedle European Select fund, managed by FE Alpha Manager David Dudding and Mark Nichols, rounded out the top five.
IA Japan
As well as European equities, analysts and fund managers have become more bullish about Japan noting the ongoing work towards restructuring the economy undertaken by prime minister Shinzo Abe. The sector was up by 6.51 per cent during the first half of the year.
Source: FE Analytics Market Intel Tool
As the table above shows, the Schroder Tokyo fund was the most researched fund by advisers during the first half of 2017.
The four crown-rated fund has been managed by Andrew Rose since 2004. Its largest holdings include Toyota Motors, Sumitomo Mitsui Financial Group and Nippon Telegraph & Telephone.
The fund returned 3.32 per cent, lower than the IA Japan sector average and its Topix index benchmark, which was up by 6.02 per cent.
Performance of fund vs sector & benchmark over H1
Source: FE Analytics
The five crown-rated AXA Framlington Japan fund managed by FE Alpha Manager Chisako Hardie and Legg Mason's four crown-rated offering were also among the top 10 researched Japan funds.
IA Sterling Corporate Bond
The IA Sterling Corporate Bond remained a favourite with investors during May. The average sector fund has returned 2.87 per cent during the first half of the year.
Source: FE Analytics Market Intel Tool
The £4.8bn Invesco Perpetual Corporate Bond fund, run by FE Alpha Manager Michael Matthews and Paul Causer, was the most popular among FE Analytics users.
The fund aims to deliver a combination of income and capital growth over the medium-to-long term. In the first six months of the year the fund returned 4.04 per cent, however, over five years the fund is up by 33.39 per cent, compared with a 33.01 per cent rise for the average sector fund.
Fund research house Square Mile Rating noted: “This fund is run by highly experienced managers Paul Causer and Mike Matthews, who have proved themselves capable of producing strong returns over longer periods.”
The research firm highlighted the managers’ high conviction approach and emphasis on risk could result in periods where the fund’s performance may differ substantially from the benchmark.
Performance of fund vs sector over H1
Source: FE Analytics
Ian Spreadbury’s Fidelity Moneybuilder Income fund was the second most-researched fund in the sector, while Richard Woolnough’s M&G Corporate Bond and M&G Strategic Corporate Bond funds also featured at the top of the list.
Two ethical bond funds were also among the top 10 most researched funds: Rathbone Ethical Bond and the Kames Ethical Corporate Bond, managed by FE Alpha Manager Iain Buckle and Euan McNeil.