Old Mutual UK Dynamic Equity, the Vanguard LifeStrategy range and Invesco Perpetual Global Targeted Income are some of the funds that have benefitted from a greater share of investor research in 2017, analysis by FE Trustnet suggests.
Following the challenging conditions witnessed in 2016, the current year has been a relatively easier one for active managers. As a recent article showed, the percentage of active funds outperforming their benchmarks has increased in several sectors during 2017 from the lows seen last year.
However, that’s not to say 2017 has been all plain sailing. Investors have fretted about the low levels of implied volatility seen in markets and have been keeping an eye on potential catalysts for a market correction, with the ongoing tensions between the US and North Korea being just one.
But have these market conditions led to any significant changes in the funds that professional investors are researching on FE Analytics?
Performance of fund vs sector and index since launch
Source: FE Analytics
The FE Analytics Market Intel tool allows us to see the research undertaken by the professional investors using FE Analytics. For this article, we have focused on the number of times users have looked at funds’ FE Analytics factsheet, which represents a more advanced form of research than, say, comparing it to the rest of its peer group.
In order to find out which funds are being researched more heavily, we determined each fund’s share of all the factsheet views on FE Analytics during the whole of 2016 and the opening eight months of 2017. We then worked out which have seen the biggest jump in their share of total factsheet views.
The £568.4m Old Mutual UK Dynamic Equity fund, which is headed up by FE Alpha Manager Luke Kerr, comes on top. The five FE Crown-rated fund has made a 400.93 per cent total return since its launch in June 2009, making it the second-best performer in the IA UK All Companies sector; it is also top decile over one, three and five years.
The portfolio is built around long and short positions in UK equities, typically those outside of the FTSE 100. It currently has 52 long positions, with Boohoo.com, Paysafe Group and Ascential being the largest, and three short positions.
The following table shows the 25 Investment Association funds that benefitted from the biggest gains in their share of total FE Analytics factsheet views over the year to date.
Given the vast number of funds in the universe, the number showing their share is very small – the most researched fund by a wide margin, Fundsmith Equity, accounts for less than 0.125 per cent of all factsheet traffic – so we haven’t shown this on the table. We have, however, revealed its rank in the universe for factsheet views.
Source: FE Analytics Market Intel tool
As can be seen, it’s a rather mixed bag of funds drawn from a number of peer groups. However, some themes can be seen.
The Vanguard LifeStrategy range, which are static-allocation portfolios built using Vanguard’s equity and bond index funds with ongoing charges of just 0.22 per cent, continues to grow in popularity among professional investors. Earlier this year, FE Trustnet found that they are the most heavily researched risk-targeted funds by professional investors.
As well as providing investors with low fees, they have also performed relatively strongly as four of the five funds in the range are in the top quartile of their sector. The fifth, Vanguard LifeStrategy 100% Equity, is third quartile.
Another trend is professional investors paying more attention to European equities, followed the marked improvements in the region. If we look at the 100 funds seeing an increase in factsheet views, 10 of them are from the IA Europe ex UK sector.
Three have made it into the top 25: Marlborough European Multi-Cap, FP CRUX European Special Situations and Invesco Perpetual European Equity. All of these have outperformed their average peer and the FTSE World Europe ex UK index over three and five years.
Jeffrey Taylor’s Invesco Perpetual European Equity fund – which looks for quality companies trading at attractive valuations – is the highest rated by the FE Invest team, as it has a place on the FE Invest Approved List.
“Taylor has been managing this fund with an identical process for over a decade, and has over 30 years of European equity investing experience, which is a promising sign for a strategy that relies on identifying long-term value opportunities.,” the FE Invest team said.
“The process is simple to understand and has been consistently applied throughout several economic and financial market cycles. However, investors in such a valuation-oriented strategy must be willing to maintain their holding if they are to reap the rewards of patience.”
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
The changes in factsheet views also back up the notion that high valuations, low volatility and mounting geopolitical tensions are increasing attention on cautious strategies.
Of the 100 funds with the biggest increases in factsheet views, nine were from the IA Volatility Managed sector while the IA Targeted Absolute Return and IA Mixed Investment 20-60% Shares sectors had eight each.
Those making it into the top 25 with the biggest jumps in factsheet research include Invesco Perpetual Global Targeted Income, Artemis Monthly Distribution, Rathbone Total Return Portfolio, SVS Church House Tenax Absolute Return Strategies and L&G Multi-Index 5.