UK IFAs “refuse to give up on Europe”, latest FE data suggests
The latest rebalancing of the FE Adviser Fund Index (AFI) indices suggests that UK independent financial advisers are keeping clients exposed to European assets, whilst still guarding against associated risk.
Instead of pulling away completely from funds exposued to Europe, the panelists whose choices result in the three AFI indices – Cautious, Balanced and Aggressive – decided to add exposure to products such as Ignis Argonaut European Income.
There was some asset re-allocation, with panelists recommending exposure to European equity be cut by 2% to 10% of the Aggressive portfolio – in turn increasing UK exposure to 34% from 30%.
The AFI Balanced index saw its international exposure cut 5%, although exposure to Japan and the UK were up 1% and 2% respectively.
Bigger cuts were seen in the area of credit. Exposure to corporate bonds in the AFI Cautious index was cut 7% to 18%, while overall fixed interest exposure was reduced to 38% from 41%.
As the adjustments were made, panelists also showed a propensity to select funds from a limited range of providers. In total across the three indices, they selected 125 funds from 46 providers. UK fund manager M&G was most popular, with 11 funds selected. Schroders was another popular choice, with nine funds selected.
The most popular funds selected across all three indices were: First State Asia Pacific Leaders, AXA Framlington UK Select Opportunities, Aberdeen Emerging Markets, L&G Dynamic Bond and M&G Optimal Income.
The most popular funds selected for the Aggressive index according to weighting were: First State Asia Pacific Leaders, Schroder UK Alpha Plus and M&G Global Basics.
For the Balanced index they were: L&G Dynamic Bond, First State Asia Pacific Leaders and M&G Property Portfolio.
For the Cautious index they were: M&G Optimal Income, L&G Dynamic Bond and Artemis Income.
The three indices – Cautious, Balanced and Aggressive – aggregate fund and asset allocation recommendations from a panel of UK investment advisers. The indices are rebalanced twice a year and this latest review, effective 1 November 2011, marks their 15th season.