This year’s market volatility has led to dramatic shifts in adviser fund selection, as investors’ quest for stability is tested against asset falls and an uncertain political outlook.
FE Analytics data tracking advisers’ portfolio changes has produced a “phenomenal” increase in interest in the disparate range of funds that sit in the Specialist sector, according to FE director Mika-John Southworth.
“Month on month advisers tend to stick with the same funds, so to see significant changes is quite interesting. The increase in funds being researched in the Specialist sector is a good thing for the industry,” he said.
However, the property sector was the most popular in terms of individual portfolios. Seven of the 40 most added-to vehicles during the period sit in this asset class.
The data set encompasses 15,000 advisers. FE said many used the portfolios as a centralised way of making changes to client portfolios, which nowadays typically sit on platforms.
Changes made on the FE service automatically feed through to platform holdings, though the data provider acknowledged that some advisers may only use the service for paper portfolios.
Jim Wood-Smith, head of research at Hawksmoor Investment Management, said the shift to more specialised portfolios showed “understandable confusion” in the market.
On the increase in popularity of both the Specialist and the Unclassified sectors, he added: “It could show [advisers] looking for diversification – a sensible thing to be doing. It also could be complete disillusionment with traditional sectors.”
Ben Yearsley, investment director at the Wealth Club, agreed the changes suggested investors “do not know where to look”.
He said: “When you have a couple of sectors doing well and a general upward trajectory you would expect concentration, but people are all over the place.
“It has been a very strange 12 months and there is no clear direction for where people are looking for ideas.”
The Stewart Investors Asia Pacific Leaders fund has been added to more than any other product so far in 2016, FE’s data shows. But this does not appear to suggest a growing interest in Asian and Chinese equity portfolios in general. Additions to these asset classes have more than halved from 2015, despite certain funds finding favour (see table).
The Henderson UK Property Oeic and the Invesco High Income fund were the next most popular vehicles.
The figures showed 2016 began with a scramble for familiarity, with the UK All Companies sector initially surging.
Interest in the sector during the first six weeks of the year was up 50 per cent compared with 2015, based on additions to portfolios and searches for relevant funds. But interest has since tailed off as Brexit concerns increase.
