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Advisers boost Asia and multi-asset research in August

03 September 2018

The professional investors using FE Analytics spent more time researching IA Asia Pacific Excluding Japan, IA Flexible Investment and IA Europe Excluding UK funds in August.

By Gary Jackson,

Editor, FE Trustnet

Last month saw a significant increase in the amount of research that professional investors carried out into Asian equities, multi-asset funds and European portfolios, the latest study from FE Trustnet shows.

August has historically been regarded as a relatively quiet month for markets but in 2018 it marked the S&P 500 achieving the longest bull run on record, further developments in the US trade tariff campaign and an increase in the Bank of England’s base rate.

Against this backdrop, FE Trustnet wanted to see what professional investors have been researching more over the past month. To do this, we reviewed the behaviour of the financial advisers, discretionary fund managers, paraplanners and other professionals who use FE Analytics.

The below chart shows which Investment Association sectors captured a greater share of FE Analytics research activity in August 2018 compared with over the previous 12 months.

 

Source: FE Analytics Market Intel Tool

As can be seen, it’s the IA Asia Pacific Excluding Japan sector that has attracted the most additional research by quite a margin. Over the 12 months to 31 July 2017, the peer group accounted for 3.170 per cent of all Investment Association research through FE Analytics but this climbed to 6.667 per cent in August.

One of the most obvious reasons why Asian equities are being more heavily researched is the move by US president Donald Trump to place trade tariffs on other countries as part of his ‘America First’ ideology. China has borne the brunt of this and analysts expect Asia to feel the effects of it more than the US.

There was also a large jump in the amount of research being carried out into the IA Flexible Investment sector. As its name suggests, this peer group is a relatively mixed bag of funds, with some members taking a very cautious approach to investing while other make full use of the flexibility to position aggressively in risk assets.

European equities also proved popular in August, with both the IA Europe Excluding UK and IA European Smaller Companies sectors seeing an uptick in their share of total FE Analytics research. IA Volatility Managed, IA China/Greater China and IA Mixed Investment 40-85% Shares also got more attention.

The IA Specialist sector – another mixed bag of funds – was hit with the largest fall in interest, moving from 5.086 per cent of research over 12 months to 3.579 per cent in August. Latin American equities and natural resources funds appear to be the main portfolios that the professionals are spending less time looking at.


Turning to individual funds and, in keeping with the above, Aberdeen Asia Pacific Equity was the one that saw the largest uptick in research on FE Analytics during August. The £869.8m fund is bottom-quartile over three and five years but has moved into the second quartile over shorter time frames as it’s more defensive nature came to the fore amid market concerns over a potential trade war.

In second place is FE Alpha Manager Paul Flood’s Newton Multi-Asset Income fund, which reached its three-year anniversary earlier this year. The fund does not sit in the IA Mixed Investment 20-60% Shares peer group where most multi-asset income funds can be found as Flood’s approach emphasises an unconstrained search for income, therefore requiring a home in IA Flexible Investment.

The table below, which shows the 50 funds with the largest increases in research activity, highlights the sharp increase in research into multi-asset portfolios during August. L&G Multi-Index 5, F&C MM Navigator Moderate, Architas MA Passive IntermediateKames Diversified Monthly Income and Rathbone Strategic Growth Portfolio are some of the multi-asset funds attracting more attention.

 

Source: FE Analytics Market Intel Tool

Due to concerns such as the Brexit process and political instability, investors have been overlooking UK equities for much of the past two years. The share of research going to the IA UK All Companies sector dropped from 10.426 per cent over the year to 31 July 2018 to 9.279 per cent in August.

However, our data shows that Fidelity Special Situations has seen a decent uptick in research over the past month. FE Alpha Manager Alex Wright’s £3.3bn fund, which is managed with a contrarian approach and has a bias towards medium- and smaller-sized companies, saw its FE Analytics research rank climbed from 68th place over the last 12 months to 18th in August.

Of course, not every Investment Association member was researched more heavily in August. The fund with the biggest drop in research share was FE Alpha Manager Alexander Darwall’s £5.8bn Jupiter European fund; however, it received a massive amount of attention in 2017, suggesting a fall back to more ‘normal’ levels should not be too surprising.

Other funds attracting less research in August 2018 include Artemis US Select, Newton Real Return, Threadneedle Global Equity Income, Invesco Perpetual High Income, 7IM AAP Adventurous, Templeton Global BondStandard Life Investments Global Absolute Return Strategies and LF Woodford Equity Income.


We also used the FE Analytics Market Intel Tool to see which fund management groups received more research activity in August compared with the past 12 months.

Grouped by fund house, the product run by Legal & General Investment Management saw the largest uptick in interest last month. Its funds accounted for 3.103 per cent of research on FE Analytics in August, up from 2.539 per cent over the prior 12 months.

Our data shows that the group’s range of passive multi-asset funds – managed by Justin Onuekwusi – were its most popular offerings as the top five most-researched products were L&G Multi-Index 5, L&G UK Property, L&G Multi-Index 3L&G Multi-Index 4 and L&G Multi-Index 6.

 

Source: FE Analytics Market Intel Tool

Valu-Trac Investment Management, which is the fund administrator working on products managed by the likes of AJ Bell and Chelsea Financial Services, appears in second place. Large groups such as Scottish Widows, BMO Global Asset Management, Pictet Asset Management and T. Rowe Price were also more popular.

At the bottom of the table are a number of household names, with Fidelity International losing the most research share. It is followed by Aberdeen Standard Investments, Schroder Investment Management, St James’s Place, M&G Investment, Jupiter Asset Management and Invesco Perpetual.

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