Advisers shun UK equity funds for mixed investment sectors

Paul Richards

Advisers continue to shun the UK equity income sector as it fails to enter the top 10 bestselling  sectors on FundsNetwork platform over the past 12 months.

In February, the three mixed investment sectors – the Mixed Investment 40-85% Shares,
Mixed Investment 20-60% Share, and Mixed Investment 0-35% Shares – were the three bestselling sectors on the platform in this order.

UK equity income topped the ranking the same month a year ago.

The UK equity income sector last appeared in the list in May ranking in 5th place.

Fixed income, covering global bonds, strategic bonds and high yield bonds, also gave a boost to the platform’s sales in February, signalling more caution among investors.

Meanwhile, Old Mutual North American Equity, which is a new entry in the top 10 advisers sales by fund over the past months, topped the sales ranking for February, followed by Vanguard LifeStrategy 60% Equity and Fundsmith Equity Fund, two consistent picks for FundsNetwork users.

FundsNetwork head of sales Paul Richards says advisory firms and their clients have become increasingly wary of the market euphoria and how much further the current bull run has left to go.

“With plenty of things having the potential to spook market sentiment in 2017, we perhaps unsurprisingly saw many investors continue to take risk off the table and either diversify their portfolio through multi asset funds  or seek the safety of fixed income.

“This was evidenced by the number of multi asset and fixed income funds that appeared in our bestsellers’ lists in February.

“Despite markets reacting rather benignly to Article 50 being triggered, we could still see sentiment become increasingly cautious in the following months of Brexit negotiations. As a result, we could see further demand for multi asset investments or even more defensive assets such as fixed income.”