2018 is drawing to a close so now is time to take a look back at the year gone by to see what facts and figures have emerged. In order for asset managers to better connect with advisers and understand their investment decisions, it’s crucial that we look at how advisers are behaving and why that may be.
We have delved into FE’s leading investment research and analysis tool, FE Analytics, to take a look at the funds that have attracted the most adviser interest, those which have fallen out of favour, and why this has been the case. Aside from just performance, factors such as managerial reshuffles and the reputation of a fund or fund manager have also had an impact on what advisers have been researching.
Movement at the top
Let’s first of all take a look at any movement at the top of the list of most researched funds last year to see if there has been any significant change. Fundsmith Equity has claimed the title of first place this year, which is actually one better than its second-place finish for 2017. The Fundsmith fund led the pack by some way this year, having been researched 45% more than second place Woodford Equity Income. The fund was also awarded the maximum five FE Crown rating at the last ratings rebalance in July and manager, Terry Smith, is an FE Alpha Manager.
Also moving within the top five is Alexander Darwall’s Jupiter European Fund, which this time last year, took the top spot for the first time ever. This time around however the fund has slipped three places to fourth.
Although not being in the top five last year, the 2016 winner and former top five regular, Standard Life’s Global Absolute Return Strategies (GARS), has fallen to 15th place from sixth in 2017. Standard Life’s GARS was removed from the FE Approved List in September 2016.
We asked FE research manager, Charles Younes for his view: “FE five Crown-rated Fundsmith Equity is managed by Terry Smith, one of the most well-known UK managers and the fund continues to outperform peers, so we would expect Fundsmith to be vying for top spot. In relative terms, the fund remains impressive, only being challenged by a few funds with similar investment strategies.
“For Standard Life GARS, poor performance over the last four years and an upcoming change to the management, with Aymeric Forest replacing Gary Stern in early 2019, this result is unsurprising. The fund has also recorded outflows, as investors were offered alternatives such as JPM Global Macro Opportunities, Invesco Perpetual Global Targeted Absolute Return and Aviva Multi Strategy Target Returns.”
Risers and fallers
Now let’s turn our attention to some of the more dramatic risers and fallers. Fidelity Global Special Situations deserves a mention here for having stormed up the rankings and into the top 10 most researched funds in 2018. The fund achieved a final position of sixth most researched this year, which is up 72 places from 78th place in 2017. Younes explains that this was largely down to a strong focus on risk management and portfolio construction: “Manager, Jeremy Podger, was handed this portfolio in 2012 after a period of underperformance and given free rein to refashion it, which he has done with some success so far. His ability to generate returns from various types of opportunity is impressive, and testament to the skill and experience he has accumulated over his career. Risk management is such a key part of the process and the team are passionate about the portfolio being driven by good stock picking, which is something on which they have consistently delivered.”
Of the top 100 most researched funds in 2017, Artemis US Select suffered the biggest fall in the rankings, as it dropped from 15th place to 210th place, a change that appears to be more down to timing than any performance the fund has reported. Younes added: “Last year saw the Artemis fund reach its three-year anniversary so it was not surprising to us that it occupied a spot in the top 10, especially given the good performance results it achieved. The fund’s performance has remained good this year, but interest may have declined simply because a year has now passed since the anniversary and advisers have turned their attention elsewhere.”
(The top 10 most researched funds on FE Analytics)
There are many factors, such as the ones mentioned in this blog, that can cause advisers to take an interest in particular funds. Whether it be good or bad performance returns, manager strategy or upheaval within the fund group, they all impact advisers and all these things combined give asset managers an insight into exactly where advisers are turning their attentions to and informs them as to how they might be able to better engage with advisers.
To find out more about how your company’s funds fare in the market, along with how they are rated to gain a better understanding of how you are viewed by advisers please contact us.