More than half of fund selectors (53%) are tilting heavily to active managers while maintaining core holdings, according to research from Rathbones Asset Management.
A further 57% of those questioned said they have become ‘much more favourable’ to active strategies.
Researchers working on Rathbones AM’s behalf spoke to a IFAs, discretionary fund managers and private banker fund selectors across the UK, collectively managing about £234bn.
They found global uncertainty and higher interest rates are driving an interest in active strategies by fund.
Only 18% said they are switching to defensive and tangible assets, while 29% said they were going into cash and short duration bonds.
In terms of the attraction of active strategies, the ability of managers to pick sector winners such as defence and cyber security, while avoiding companies with vulnerable supply chains, were factors mentioned by the fund selectors.
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Higher interest rates and the ‘growing gap’ between successful and unsuccessful companies is adding momentum to the switch, the researchers found.
Almost all (99%) the fund selectors spoken to said they are concerned that passive growth trackers are ‘over-exposed to companies with stretched valuations’, and 91% agreed that some markets, such as small caps and emerging market debt, are unsuitable for passive indexing.
