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Adviser Fund Index

With 169 different funds from 55 fund management groups represented across the Adviser Fund Index series following the rebalancing on November 1, the three AFIs have become even more diverse.

The AFI panellists did not shy away from making widespread changes to the underlying funds held within their portfolio recomm- endations at the rebalan- cing point.
Financial Express head of marketing and communication Paul Wynne says: “The latest rebalancing of the AFI has witnessed the highest churn rates yet.

“Compared with the last rebalancing in May 2006, the AFI Aggressive index alone has experienced a 32 per cent change in constituents, up from 24 per cent in May, while the AFI Balanced and AFI Cautious indices have experienced churn rates of 29 per cent and 25 per cent respectively.”

But while the panellists have selected a wider range of constituents for their portfolio recommendations, a relatively small number of funds dominate the overall weightings.

The table shows all funds that were chosen by the panellists more than five times as constituents across all three AFIs, ranking the funds by the number of choices.

Top of the list is Artemis European growth, which was chosen 16 times by the panellists to appear as an AFI constituent.
Invesco Perpetual high income, JP Morgan natural resources and Old Mutual corporate bond were each chosen six times.
While these 19 funds represent just 11 per cent of the different constituents appearing across the three AFIs, they make up 30 per cent of the Aggressive AFI, 39 per cent of the Balanced index and 39 per cent of the Cautious AFI by weighting.

The influence of the 20 best-backed funds within each index is even greater, representing 49 per cent, 45 per cent and 49 per cent of the Aggressive, Balanced and Cautious AFIs respectively.

The fact that all but two of the 19 funds in the table appear as constituents in each of the three AFIs suggests that many funds have the required characteris- tics to be held within port-folios with contrasting risk profiles.
Indeed, 53 of the 163 different AFI funds appear as constituent in all three indices.


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