Lindsell Train UK Equity has fallen out of favour with multi-managers as the fallout from the Neil Woodford scandal inspires a greater degree of caution among investors.
Research provided by consultancy Harrington Cooper shows the £6.6bn fund led by star manager Nick Train (pictured) slipped out of the top 10 most commonly held funds among multi-managers in the third quarter.
The fund, a “stalwart” of Harrington Cooper’s list, has seen an uptick in clients pulling their money out following concerns over Train’s concentrated portfolio and his preferred growth style which has seen a recent dip in performance.
While Lindsell Train UK Equity still ranks in the first quartile over one, three and five years, it is circling the bottom of funds in the IA UK All Companies sector, losing investors 6.8% on a three-month view.
Harrington Cooper head of investment research Jonathan Francis said Lindsell Train UK Equity’s absence from the rankings may point to “a degree of increased caution around the most commonly held boutiques” after the implosion of Woodford’s fund business.
Two other funds from boutique groups were also ousted from the rankings over the quarter – Artemis Income and Polar Capital Global Insurance. They were joined by the iShares Physical Gold ETC.
Fundsmith Equity remains favourite pick for multi-managers
Heightened anxiety around boutique funds did not dent multi-manager enthusiasm for Terry Smith’s Fundsmith Equity fund, which retained its spot in Harrington Cooper’s list.
Similar to Lindsell Train UK Equity, Fundsmith Equity has also suffered from weaker performance and has delivered comparable losses to Train’s fund over three months with the fund down 6.0%.
But Smith’s fund, which sits in the IA Global Equity sector, has remained popular among investors.
At the year to the end of September the fund had taken in net inflows of £1.3bn, according to data from Morningstar. That month, despite taking a battering in the global growth sell-off, it attracted £36m in net client money, while Lindsell Train UK Equity suffered its largest ever monthly outflows.
Fixed income funds dominate
Fixed income funds like Royal London Short Duration High Yield Bond dominated multi-managers’ top picks.
Allocations to fixed income across balanced portfolios rose by 1.01% to 24.73% during the quarter with investors funnelling the most money toward investment grade bonds and gilts which climbed by 1.35% and 0.47% respectively. Sovereign bonds meanwhile fell 1.06% to their lowest level on record.
“The entrance of funds such as Gam Star MBS Total Return, Royal London Short Duration High Yield Bond, Nordea Low Duration European Covered Bond and iShares Overseas Corporate Bond suggests that investors are continuing to hunt for higher yielding areas of the market that offer some degree of safety,” said Francis.
Multi-managers marginally upped their exposure to equities by 0.24% to an average exposure of 55.82%, and continued cutting their exposure to alternatives, including property, which fell 0.75% in Q3 to 7.7% “a new historic low”.
Most commonly held funds
| Man GLG Undervalued Assets |
| Royal London Short Duration High Yield Bond |
| Blackrock European Dynamic Fund |
| Fundsmith Equity |
| iShares Overseas Corporate Bond Fund |
| L&G EM Government Bond Fund |
| Gam Star MBS Total Return |
| Nordea 1 Low Duration European Covered Bond |
| Royal London Sterling Credit Fund |
| TM RWC UK Equity Income |
