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US funds roared back into inflows in November, which was only the second month of 2022 with net overall inflows, which amounted to £389mn.

And the source of the inflows may provide a portent for client expectations for 2023, with bond funds attracting a net £1.3bn across the multiple IA sectors combined, and US equities, which also had a net inflow of £1.3bn.

In contrast, UK equity mandates continued their bad year with outflows of £1.1bn, amid a general decline for equities, which had outflows of £485mn during the month.

Moves into bonds and the growth-heavy US equity market may indicate that investors are pivoting towards a world where inflation is lower and interest rates, whether they actually fall in 2022, are on a much tamer path, boosting the case for the sort of growth stocks that proliferate in the US. 

Within the fixed income space, it was corporate bond funds that attracted the interest, with just shy of £1bn going into those funds. 

Global equity funds had inflows of £58mn, while all other equity regions had outflows. 

Our database indicates the average allocation to US equity funds in the balanced portfolios of the DFMs we cover is now 14.2 per cent.

This fell gradually over the course of 2022 from 15.3 at the start of the year.

Of course DFMs will have exposure to US equities through any global mandates they own.

But the DFM that deviates furthest from the peer group in terms of their allocation to US funds is RBC Brewin Dolphin, with an exposure of 28 per cent, followed by Bordier at 24 per cent.

At the other end of the distribution, Wise has zero allocated there, while Tacit has allocated 5 per cent.

Those hoping the UK would benefit from that decline will be sorely mistaken.

Average exposure to UK equities has seen an even more dramatic fall from 17 per cent to 15.3 per cent.

Indeed average overall equity exposure fell over 2022 from 58.9 per cent to 55.5 per cent (though global funds have seen their following increase).

In terms of UK exposure, Morningstar and Evelyn Partners Core MPS Strategies are outliers, with exposures of more than 24 per cent in their balanced portfolios.

At the other end of the spectrum, Charles Stanley has just 4 per cent deployed in UK funds. 

There has been a bit of a shake-out in the UK equity space since the pandemic, with several managers returning or moving to pastures new, but the most widely owned UK All Companies fund among the allocators we cover has long been Lindsell Train UK Equity, which appears in the portfolios of nine of the DFMs we cover. 

And while the strategy is long-established, it pressed home its advantage in 2022, picking up three new buyers, with just one seller (one buyer picked it up as recently as the last quarter of last year).

We have spoken in the past about a "big four" of the most popular funds among DFMs in the UK growth equity world (Lindsell Train UK Equity, Liontrust Special Situations, Ninety One UK Alpha and Man GLG Undervalued Assets).

But over 2022 the first two of these broke away from the pack.

The Liontrust fund (which shares several of its top holdings with Lindsell Train) is owned by seven DFMs we cover while the other two are owned by five and four respectively.

If investors are starting to focus more on a world in which inflation is lower, that would be expected to boost the case for the types of stocks in which Lindsell Train specialise.

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