Professional investors spent significantly more time researching funds in the IA Global sector in July, according to analysis by FE Trustnet, although areas such as strategic bonds and UK equities also became more popular over the month.
The first seven months of the year have presented investors with challenging conditions to navigate, after a bullish start soon gave way to a broad-based sell-off and the return of volatility to equity markets. Recent months have seen markets make progress, but issues such as US president Donald Trump’s trade tariffs overhang investor sentiment.
Against this backdrop, the IA Europe Excluding UK sector was the best-performing Investment Association peer group in July with a 3.68 per cent gain, followed by IA Global Equity Income (3.44 per cent) and IA Europe Including UK (3.17 per cent). IA China/Greater China was the worst performer on average after falling 1.83 per cent.
In the first article of a new ongoing series, we wanted to find out how the sectors and funds the financial advisers, discretionary fund managers and other professional investors on FE Analytics were researching changed in July compared with the previous 12 months.
Source: FE Analytics Market Intel Tool
The chart above shows the Investment Association sectors that received a greater share of factsheet views in July versus the past year. As can be seen, the leader is the IA Global sector: funds in this peer group accounted for 8.551 per cent of July’s factsheet views on FE Analytics, up from 7.996 per cent in the 12 months prior.
For some time investors have been heavily researching global equities as they seek to broaden out portfolios from the UK in the light if the country’s decision to leave the EU. Funds such as Fundsmith Equity, First State Global Listed Infrastructure and M&G Global Dividend consistently receive among the highest levels of research on FE Analytics, for example.
However, it also appears that professional investors were researching UK equities more in July after overlooking them for much of the period since the Brexit referendum. The share of factsheet views going to IA UK Equity Income funds went up by 0.344 percentage points (the fourth highest increase) while 0.254 percentage points more went to IA UK All Companies.
Fixed income was also of interest to financial advisers and other professionals as the IA Sterling Strategic Bond and IA Sterling Corporate Bond sectors grew their share of factsheet traffic last month, as did IA Targeted Absolute Return – suggesting that a degree of nervousness was present in markets.
Turning to the individual funds that increased their share of factsheet views in July shows that Baillie Gifford American comes out on top. This was the 16th most viewed FE Analytics factsheet in July, moving up from 60th over the previous 12-month period and representing a 0.1767 percentage-point increase in traffic.
Managed Gary Robinson, Helen Xiong, Tom Slater and Kirsty Gibson, the £1.7bn fund has a strong track record. FE Analytics shows it is the best performer in the IA North American sector over one, three and five years; in addition, it has made the highest return of the entire Investment Association universe over 2018-to-date, after gaining 27.76 per cent.
The FE Invest team, which has the four FE Crown-rated fund on its Approved List, said: “Overall, the fund would be most suited in a portfolio with a long-term investment horizon as well as one that can tolerate high volatility.
“The fund’s benchmark-agnostic approach is encouraging, where the team pays no attention to benchmark constituents/weights when constructing the portfolio. The fund exhibits an above-average level of volatility due to it being heavily concentrated in high conviction positions. The team does not want to dilute the impact of strong companies in the name of diversification.”
Source: FE Analytics Market Intel Tool
In second place is FE Alpha Manager Keith Ashworth-Lord’s £408.9m CFP SDL UK Buffettology fund, which has gone from being the 93rd most viewed fund over 12 months to the 28th most viewed in July. The five FE Crown-rated fund is top-decile over one, three and five years and is the seventh best performer in the IA UK All Companies sector over 2018 so far.
Standard Life Investments Global Smaller Companies, which is headed up by Alan Rowsell, also saw an increase in attention in July. The fund’s small-cap focus, coupled with Standard Life Investments’ respected, ‘Focus on Change’ investment approach and Matrix stock selection tool, means it is one of the highest returns of the IA Global sector in recent years.
Further down the table we see continued interest in Baillie Gifford funds, with strong performers such as Baillie Gifford Global Discovery and Baillie Gifford Managed picking up more research from advisers. Reflecting the move towards global equities, already-popular funds like Fundsmith Equity, Rathbone Global Opportunities and Lindsell Train Global Equity are also getting researched more on FE Analytics.
When it comes to the sectors that were researched less in July, IA Europe Excluding UK was hardest hit as its share of factsheet views fell from 6.591 per cent to 4.225 per cent – a decline of 2.366 percentage points.
European equities were very much in favour for much of the past year, thanks to a recovering economic picture and relatively attractive valuations. However, investors have started to look elsewhere – despite the strong performance of its members in July.
The IA UK Smaller Companies, IA Volatility Managed, IA Specialist and IA North America sectors also witnessed a fall in factsheet views compared with their 12-month share, although their decline were much smaller than the fall in IA Europe Excluding UK.
Source: FE Analytics Market Intel Tool
Jupiter European saw the largest fall in research in July, although this is down to the fact that the fund was extremely heavily researched in 2017. Indeed, it was the most viewed FE Analytics factsheet of last year but slipped into third place last month.
Other significant funds with the largest falls in the share of factsheet traffic they attracted include Artemis US Select, FP CRUX European Special Situations, LF Lindsell Train UK Equity, Trojan and LF Woodford Equity Income.