The question for advisers is in which asset class to put clients’ money. Over the past two years, the debate has gone from equities versus bonds, to mixing property, alternatives and cash into portfolios.
According to recent figures from the Investment Management Association (IMA), equity continues to be the best-selling asset class, remaining in the top spot since March 2013, with net retail sales of £1.4bn in April alone. The multi-asset space was the second best-selling, with inflows of £511m for the month, while property funds have seen a revival, as third best-selling space, seeing inflows of £446m - the highest since December 2009. Fixed income lagged behind with sales of £270m in the same time period, but this is still the best net inflow the asset class has seen since May 2013.
In terms of specific sectors, UK Equity Income was the best selling, with net retail sales of £500m, the highest ever since the IMA began recording data in 1992.
Table 1 shows the top 5 performing funds in the fixed income, UK, global equity and property spaces respectively. It shows the UK space - particularly smaller companies - outperformed other regions.
Table A shows the same data but for the Europe, Asia, Japan and North America spaces.
Gary Potter, co-head of the F&C multi-manager team, cites the fact equity markets have enjoyed one of the best five-year periods of the past century. “In 2008 and 2009 it was a calamitous fall, but the last five years have been extremely good if you stayed the course,” he says.
Looking back over the past few years, commentators were saying the west was in decline, economies were suffering and the best thing was to invest in the commodities super cycle, gold and emerging markets, he says. “But in all three cases, returns were extremely poor and western markets have been in development. It is always worth remembering that what people say about the best places to invest doesn’t always come to fruition.”
Mr Potter says despite 2014 having a quiet start to the year, there has been a slight continuation of last year’s returns. “Markets just need time to catch up. Economies and markets can go different ways. It is the central case that economies are gradually recovering.”
“If we look at western equity markets, people were writing them off. Equities and markets are not cheap anymore, and they may not be compellingly expensive. It’s a case by case choice.”
Property
