Commercial property funds were the big winner in the November Adviser Fund Index rebalancing, as panellists demonstrated renewed appetite for the asset class.
Advisers doubled the overall property weighting in the cautious benchmark to 4 per cent, adding M&G property portfolio and Threadneedle UK property to the index.
The rise was the first since November 2006, the index’s property allocation rose by five percentage points to 10 per cent. Since then, exposure to the asset class has steadily fallen and this increase reflects a wider resurgence in demand for British property – partly driven by inflows from foreign investors.
British equities remain unpopular in the AFI. In line with recent rebalancing sessions, panellists cut their aggregated exposure to domestic stocks, this time by three percentage points. British equities now form just 21 per cent of the cautious index – down from 36 per cent in November 2007.
Panellists reduced their overall exposure to Asia by one percentage point. First State global emerging markets leaders (which held 50 per cent of its assets in the region at the end of October), GLG Japan core alpha, Jupiter India, Jupiter Japan income and Schroder Tokyo were removed. Support for First State Asia Pacific leaders halved, from six selections to three.
Falls in the British and Asian weightings were largely offset by increased exposure to continental Europe and other equity regions. The European allocation rose by one percentage point in November despite the ejection of Fidelity European and Newton European higher income. Ignis Argonaut European income maintained its popular-ity, with four selections.
Away from traditional, long-only funds, demand for absolute-return-style mandates showed no sign of slowing, as Artemis strat- egic assets, Sarasin globalsar IIID and Standard Life global absolute return strategies were added to the index by single panellists. Two advisers selected Gartmore UK absolute return, which was launched earlier this year.
Following a four percentage point increase in May, the cautious index’s fixed-income weighting fell by two percentage points in November from 43 to 41 per cent. Allianz Pimco gilt yield, Jupiter corporate bond, L&G all stocks gilt index, Royal London corporate bond and Schroder strategic bond left the benchmark.
Despite the shift, appetite for L&G dynamic bond rose dramatically, as five panellists selected the fund for their cautious portfolios – up from one in May. The move boosted the fund’s weighting from 0.9 per cent to 3.5 per cent and took L&G Investment Management into the top five providers in the index.
Turnover was broadly in line with previous rebalancing sessions, as about one-quarter of holdings were ejected. Panellists removed 27 of the funds they selected in May and added 29, increasing the total number of constituents to 104.