There has been a reversal in adviser interest in funds targeting income versus capital accumulation over the second quarter of 2024, according to Square Mile’s quarterly market intelligence report.
Income-related fund research had been in decline since the third quarter of 2023, accounting for only 32% of searches by Q1 2024 versus 46% for capital accumulation.
In the second a quarter of 2024 income funds once again became the most researched, making up 44.2% of all searches, comfortably ahead of capital accumulation at 38.5%.
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Capital preservation and inflation protection as investment outcomes remained out of favour at 9.6% and 7.7%, respectively.
Square Mile also found there has been a shift in adviser interest in groups offering passive strategies. Vanguard remained most popular with a 29.5% share, this was a decrease of 10.5% on the first quarter. BlackRock’s share of views also fell, registering a drop of 6.8% which pushed it to third place, while Legal & General gained ground to second place with 22.9% of searches.
The report revealed a reordering at an IA sector level too. IA Global grew its lead as most researched sector by 4% to 22.1%, however, IA Global Equity Income rose strongly from 10th place to second with a 13.8% share, an increase of 9.2%. IA UK All Companies dropped down to third place over the quarter accounting for an 8.7% share of views.
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There was no change in the ranking of adviser interest in asset classes. Equities maintained its lead as standout favourite at 62%, fixed income was level at 24.7%, multi-asset was slightly down at 12.8% while interest in alternatives remained negligible at 0.5%.
The most viewed active fund overall was once again WS Havelock Global Select with a 15.8% share, while the Principal GIobal Investors Finisterre Unconstrained Emerging Market Fixed Income fund and Guinness Global Equity Income funds debuted in the top three with respective shares of 7.6% and 6.9%.
Scott Dakers, business development director at Square Mile, said: “After several quarters of steady decline, it is interesting that our MI report revealed income producing strategies as once again gaining adviser attention. Moreover, that the IA Global Equity Income sector surged up the rankings to become the second most researched IA sector would suggest that fund selectors are seeking to diversify their exposure away from more traditional sources of income such as the UK market.
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“Indeed, coupled with the fact that the IA Global sector was the most viewed overall, it would seem that advisers are preferring to delegate regional asset allocation decisions to fund managers with global mandates and who have the skillset to navigate a nuanced economic backdrop.
“Overall, the economic stage looks set to be supportive for both equities and fixed income assets,” Dakers continued. “Nonetheless, events such as the US presidential elections, continued geo-political risk and a level of uncertainty over inflation and the direction of interest rates may unsettle jittery investors creating some short-term volatility.”
