Something that has caught our eye in the Asset Allocator database is the relative decline in use of global equity funds over the past year or so.
As of the end of May 2023, the average allocation to such funds among the allocators we cover is 5.8 per cent, down from a peak of 7.4 per cent in September 2022, which was the highest level for a year prior to that.
In terms of where the outliers are, Wise has 29.8 per cent in global equity funds, while Tacit has 20 per cent.
There are a large number of DFMs who allocate zero to global equity funds, among them are heavyweights such as Brewin Dolphin, Evelyn Partners and Liontrust.
The fall in allocation may be because, in the current very uncertain market environment, DFMs are loathe to effectively outsource their equity allocation to a third party.
Some of the lunch that was once eaten by the global fund folks is now being served to thematic fund folks.
But our database indicates a limited appetite indeed for specialist mandates, with allocation stuck between 1 and 1.5 per cent for several quarters.
In terms of where the demand is among DFMs for specialist funds, the most owned fund is Polar Capital Global Insurance which is owned by four DFMs.
Baillie Gifford's Global Discovery fund is owned by two of the DFMs we cover, and demand for this strategy has been steadier than for some other Baillie Gifford products, with a net of just one seller over the past 18 months.
In the global funds category, a small story here is that the £3.8bn Guinness Global Equity Income fund is now both the most widely owned global equity income product and the joint most widely owned global equity fund across all categories.
It appears in seven of the portfolios we cover, the same number as Fundsmith Equity, and one more than Fidelity Global Dividend.
Asset Allocator recently had a chat with one of the team at Guinness, and they said they are currently keen on global premium brands in areas such as alcohol and luxury goods, as these companies have so far demonstrated an ability to protect their profit margins despite the prevailing very high inflation environment.
It has a lower yield than the Fidelity fund (2.2 per cent compared to 2.8 per cent) - though the Guinness fund does not chase yield.
But in performance terms it has returned 70 per cent over the past five years, compared with 52 per cent returned by the Fidelity fund and 42 per cent for the sector.
It has also outperformed in both the down market of 2022 and the bull market of 2021 whereas the Fidelity fund struggled in both (though more so in the latter).
