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Square Mile: Income-related funds lose appeal

Havelock London leads for most-searched fund group and individual active fund

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Income-related funds had a shrinking appeal to investors in the first quarter of 2024, while strategies with capital accumulation rose in relevance, according to Square Mile’s quarterly market report.

In the third quarter of 2023, income-related funds made up 46.7% of searches through Square Mile’s Academy of Funds, but fell to 32% in the first quarter of 2024. Capital accumulation-oriented strategies, however, rose from 33.3% in the third quarter of 2023 to 46% by the first quarter of 2024.

Capital preservation and inflation protection made up a smaller portion of research, at 14% and 8% respectively.

Scott Dakers, business development director at Square Mile, said: “Many of the economic known unknowns continued to loom over sentiment as the first quarter of 2024 rolled out and market commentators have watched each new data set with keen interest. 

“On a political level, the coming months will see several key elections, not least in US, which may have repercussions on a global scale at a time when geopolitical tensions remain heightened.”

Havelock London, a boutique manager founded in 2017, was the most-searched fund group for the first quarter, representing 9.4% of inquiries. The manager outpaced First Sentier at 4.7%, Jupiter at 4.2% and Schroders at 3.9%.

Havelock also led in views for active funds, with its Global Select fund making up 12.3% of all searches. In the past five years, the fund has returned 50.6% compared with a sector average of 57.8%, according to FE Fundinfo. The WS Amati UK Listed Smaller Companies fund brought in the second-largest amount of searches while the Aegon Diversified Monthly Income fund came in third.

See also: Square Mile: Baillie Gifford and Fidelity fund ‘A’ ratings removed

In its first full quarter of data including investment trusts, the Abrdn UK Smaller Companies Growth trust represented 11.6% of all views while Fidelity Special Values PLC shored up 11.4%.

Within the IA universe, the IA Global sector topped the charts for searches at 17.6%, which was 10 percentage points ahead of IA UK All Companies in second.

“Our latest MI Report suggests that fund selectors share this longer-term focus given their research into funds which promise capital growth over more defensive strategies,” Dakers said.

“Nonetheless, the fact that the IA Global sector was the most researched is perhaps indication of a reluctance among advisers to take regional investment calls, and a preference to delegate asset allocation to fund managers with the ability to navigate an increasingly complex global stage.”

Asset class allocation stayed relatively similar, with equities increasing slightly to 60%, fixed income at 25%, multi asset falling to 14%, and alternatives at 0.8%.

This story was written by our sister title Portfolio Adviser

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