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Adviser Fund Index

The latest rebalancing of the Adviser Fund Index series has once again resulted in significant turnover.

The number of constituents across the AFI series increased on May 1, with the Aggressive, Balanced and Cautious indices now comprising 124, 116 and 107 funds respectively.

As at previous rebalancing points, the Aggressive AFI was subject to the highest turnover. The panellists added 36 new funds to the riskiest index while 21 funds were ousted, amounting to a net gain of 15 constituents.

The Balanced and Cautious indices did not exhibit the same high levels of turnover but both indices still saw significant change. The Balanced AFI had a net increase of four funds, with the panellists introducing 25 new funds and ejecting 21. The most defensive Cautious index grew by three constituents, with 17 funds dropped and 20 added.

Paul Wynne, head of marketing and communications at Financial Express, says: “Analysis of the latest rebalancing reveals that the fund selection churn rates have increased. The AFI Aggressive index has experienced a 35 per cent turnover of fund constituents, the AFI Balanced index a 29 per cent turnover, and the AFI Cautious index a 28 per cent turnover.”

The total number of different funds represented across the whole AFI series has grown to 182, with a net increase of 13.

This increases the number of fund groups represented to 58. Seven groups not present over the previous AFI season now appear in the indices while three groups previously represented no longer appear.

While turnover was high in the latest rebalancing, changes made to the overall asset allocations of the three indices were significantly less marked.

The Aggressive AFI’s allocation to equities remains high at 88 per cent but the proportion of domestic equities has fallen as a result of the rebalancing. The riskiest index now holds just 40 per cent in British equities, with the remaining non-equity allocations spread roughly evenly between fixed interest, cash and property.

The panellists increased their exposure to equities in the Balanced index, with allocations to fixed interest, property and cash all falling marginally. Equities now make up 70 per cent of the index, approximately four percentage points higher.

The asset allocation of the Cautious AFI saw little change, with equities (45 per cent), fixed interest (35 per cent) and property (10 per cent) the best-represented asset classes.

Well-backed funds added to the AFI series for the first time include Newton global higher income, Bill Mott’s PSigma income fund and ResolutionAsset Argonaut European income.

The AFI series now aggregates the portfolio recommendations of 19 adviser groups, with the recent addition of two new panellists. Beckett Financial Services and Rowan were added to the AFI panel towards the end of April.


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