Investments  

Brexit prompts dash for cash funds

Brexit prompts dash for cash funds

Financial advisers opted for “safe” cash funds over big-name brands in the weeks leading up to the EU referendum, according to figures from FE Analytics.

Data gathered using its Market Intel tool found cash funds were the most researched investment vehicles this month, replacing popular funds like the Woodford Equity Income and Standard Life GARs.

BlackRock, Aberdeen and Fidelity’s cash funds topped the list as the most researched funds before and after last week’s Brexit vote.

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Rob Gleeson, head of FE Research, said this preference for cash funds indicated a “risk-off sentiment” which is gripping the UK’s advice industry, particularly compared to the mood at the start of the year.

He said: “Despite last week’s results coming as a shock to many in the industry, it’s interesting to see that professional investors were already looking at options to cushion any shocks.”

He said extreme volatility means capital protection is a major consideration for advisers, causing cash funds to look more attractive.

But, Mr Gleeson added, cash does have some pitfalls, pointing out that if inflation spikes then the value of capital in cash funds will take a hit.

He also pointed out, despite the boost to their popularity, cash funds still make up a relatively small section of the retail funds market.

June 2016 most researched funds by advisers on FE Analytics

Rank

Manager

Fund

Sector

1

BlackRock

Cash

Short Term Money Market

2

Aberdeen

Cash

Money Market

3

Fidelity

Cash

Short Term Money Market

4

L&G

Cash Trust

Money Market

5

Royal London

Cash Plus

Money Market

6

Henderson

Cash

Money Market

7

Baillie Gifford

Cash

Short Term Money Market

8

Standard Life Investments

Short Term Money Market

Short Term Money Market

9

Wesleyan

Risk Averse

Short Term Money Market

10

Aviva Investors

Cash

Money Market

11

Fidelity

Gross Accumulating Cash

Short Term Money Market

 

 

 

 

 

 

 

 

 

 

 

 

 

TThe shift comes at a time when equity markets continue to experience heightened volatility caused by the EU referendum.

Over the past year, the performance of the UK equity income sector has been extremely rocky, down more than 7 per cent, according to FE Analytics.

By comparison, the Investment Association’s money market and short-term money market sectors showed a much steadier incline.

January to May 2016 - most researched funds by advisers on FE Analytics

Rank

Manager

Fund

Sector

1

Standard Life Investments

Global Absolute Return Strategies

Targeted Absolute Return

2

CF

Woodford Equity Income

UK Equity Income

3

Invesco Perpetual

High Income

UK All Companies

4

Fundsmith

Equity

Global

5

Stewart Investors

Asia Pacific Leaders

Asia Pacific Excluding Japan

6

Jupiter

European

Europe Excluding UK

7

Newton

Global Income

Global Equity Income

8

Henderson

UK Property PAIF

Property

9

Artemis

Global Income

Global Equity Income

10

Newton

Real Return

Targeted Absolute Return

katherine.denham@ft.com