It has been a tempestuous year for markets. Since last April, when the FTSE broke the psychologically important 7,000 barrier, the slowdown in China, speculation over the pending interest rate rise and August’s pivotal Black Monday sell off, have coalesced to create a challenging environment for fund selectors and portfolio managers looking to protect and grow their client’s investments. It is therefore unsurprising that multi-asset and absolute return funds have seen such a surge in interest.
In particular, despite controversy over the sectors’ ability to meet its objective, the IA’s Targeted Absolute Return (TAR) sector has risen the ranks, going from the 12th most researched sector to the sixth according to data from the Analytics Market Intel tool.
To get a better understanding of this sector and what advisers are interested in, we have decided to conduct some analysis using the new tool, which we built to track and better understand adviser behaviour.
The FE Analytics Market Intel (MI) tool allows us to see what advisers are researching, buying and selling. The tool collates data from all searches run on FE Analytics and we have used this to understand what about the sector has managed to retain advisers’ attention since last April’s confidence spike.
In order to create a framework for comparison, we established a benchmark which we are calling the FE Research score. The FE Research score is calculated by combining the number of reports run by advisers containing a fund/sector with the number of times advisers viewed a fund’s factsheet.
In absolute terms, the sector’s research score rose from 35,792 last January to 48,192 this January, highlighting an increase in investors looking to place their money in funds that aim for positive returns regardless of market conditions – clearly looking to protect themselves against potential downsides.
The sector’s popularity has meant that a number of fund groups have launched new products looking to cash in on the opportunity; in fact, 31 new funds have launched since 2013, with nine of those being launched in 2015.
There is a certain irony to this, as the as the sector has returned -0.05 per cent this past year.
We then compared the top ten most researched funds in the sector and calculated the amount by which their research scores had risen/fallen since last year.
The most researched fund from the sector remains the Standard Life Global Absolute Return Strategies fund – the long-standing front runner. Newton’s Real Return fund, which aims to provide a positive return on a rolling three-year period, is also a firm second most researched.
Out of the top ten most researched funds in the sector, the fund that has been hitting headlines since its launch in 2013 is Invesco Perpetual’s Global Targeted Returns fund.
This fund has managed to attract inflows of £3,849.53m over the past year – making it the group’s largest fund launched that year as well as the fund attracting the most money over the past 12 months, according to FE Analytics data. Its FE Research score has also jumped from 1,872 to 2,311 since last January.
The fund aims to provide investors with positive returns in all market conditions, and this is pitted against a rolling three-year period. The fund does not yet have a three-year track record, but its one-year cumulative total return has lost investors -0.30 per cent, data from FE Analytics shows.
Out of the other top ten most researched funds in the sector, the Aviva Investors Multi Strategy Target Return fund, launched in 2014, has also been catching advisers’ attention. Its research score has increased by 912 since last year, going from the 24th most researched fund to the sixth. This highlights the appetite in the market for new launches in the sector.
The top ten most researched TAR funds in January, 2016 are below.
