Absolute return was the most searched Investment Association sector during the first quarter of this year, according to Square Mile, indicating a shift in sentiment by fund selectors towards an asset class that has a “chequered relationship with advisers”.
The research and ratings consultancy’s latest quarterly market intelligence report revealed a 13.6% increase in views for the sector during Q1 among users of its Academy of Funds, which provides data and analysis from its 20 analysts on about 330 funds.
The Targeted Absolute Return sector accounted for 18.8% of all views, closely followed by UK All Companies which made up 18.3% of total views. In third place was IA Global with 8.9% of the total.
Square Mile chief operating officer, research and consulting Jock Glover (pictured) noted that Targeted Absolute Return had moved from eighth place in Q4 2020 to number one over the last quarter, leapfrogging UK All Companies which has led the pack for some time.
He added: “Advisers have historically had a chequered relationship with funds within the Targeted Absolute Return sector and this suggests a change in sentiment towards them.”
The most researched fund in the database was an absolute return strategy – the BNY Mellon Real Return fund, with 15.1% of all views – an increase of 13.8% from the previous quarter.
See also: Odey Absolute Return slumps to the bottom of the pack in January
Conviction in UK becomes stronger
The second-most researched fund was the ES R&M UK Recovery fund, with 10.1% of all views, which Square Mile said possibly reflected the belief that the UK is becoming more attractive on the back of a Brexit resolution and the successful roll out of the Covid-19 vaccine across the UK.
UK special situations and recovery strategies featured strongly during the quarter, as well as fixed income funds with Schroders Sterling Corporate Bond fund being the third most-viewed fund.
“That there was no discernible pattern among views at a fund level could mean that advisers are maintaining an open approach to fund selection, using a broader range of strategies to capture the opportunities across markets as we begin to emerge from the coronavirus pandemic,” said Glover.
Capital accumulation is most searched investment outcome
In terms of viewings by investment outcome, capital accumulation was the most searched, with views jumping from 47.6% in Q4 2020 to 59.8% in Q1 2021. Searches for income dropped sharply, from 25.8% to 13.4%, while capital preservation and inflation protection remained steady at 15.8% and 11% respectively.
Equities remained the most searched for asset class at 46% of searches, although this was down from 50.8% the previous quarter. Multi-asset edged up to 33% from 31% and fixed income from 18% to 19.9%. Property, however, garnered just 0.3% of views overall.
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