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Asset Allocator

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Ruffer funds see benefits of market volatility as inflows rise

Asset Allocator spent a rainy Monday crunching numbers from the Investment Association and Morningstar to test the waters of the UK fund universe. 

Starting with the bad news, the fund in the IA universe which had the largest outflows during the month was Ruffer Absolute Return.

This is a fund which is not owned by any of the allocators we cover, but does conform very much to Ruffer's stock in trade, which is to be extremely conscious of inflation and to take the view that over the next 10 years it will be much higher than it has been in the previous decade.

And that strategy has certainly been rewarding in recent years, with the £4.6bn fund having returned 32 per cent over the past three years, compared with 14 per cent for the average fund in the IA Unclassified in the same time period. 

All of the top five holdings are government bonds and there is 9 per cent allocated to cash. 

While this Ruffer fund isn't owned by any DFMs we follow, the recently launched Ruffer Diversified Return is owned by two.

This fund was launched in late 2021 and is already £2bn in size and it is underpinned by the same philosophy of capital preservation.

Asset Allocator has spent more years than they care to remember eating canapes for the cause, but must confess to not having heard of the most bought UK fund in January, Tellworth UK Select which is an absolute return fund investing primarily in UK equities.

The fund is £593mn in size and run by Tellworth co-founder John Warren, once of Schroders, and Seb Jolly.

It isn't owned by any DFMs in our database - though Tellworth UK Smaller Companies is the most popular UK smaller companies fund.

Tellworth UK Select has returned 37 per cent over the past five years while its sector, the IA Targeted Absolute Return, has returned just 8.6 per cent. It has also outperformed the UK All Companies sector over that period.

A hint to the scale of the inflows can be seen in the fact that the fund was soft closed this week. 

Those inflows are all the more impressive given the general unpopularity of UK funds, which had outflows of £1.5bn in January. This marked 18 consecutive months of investors pulling cash from the asset class.

Absolute return funds haven’t had a much better time, with outflows of £182mn in January.   

Among the UK funds with the biggest outflows during the month were Liontrust Special Situations - the second-most popular UK growth fund in our database, though it was sold by two DFMs last year. 

Bonds had net inflows during the month of £1.5bn. The bond fund available to UK DFMs that had the largest inflow during the month was iShares Corporate Bond Index, which is £4.4bn in size and had net new money of £217mn. This is owned by one of the allocators on our database. 

The most bought active bond fund was Artemis Corporate Bond, which attracted net new money of £87mn and is now £1.1bn in size. This fund is owned by five of the allocators we cover and is the second-most popular corporate bond fund in our database after Rathbone Ethical Bond.

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