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Adviser Fund Index: Funds pruned in the autumn

The Adviser Fund Index panellists trimmed their holdings in all three indices during the November rebalancing. The Aggressive index shrank the most, falling from 124 underlying funds to 114. Balanced and Cautious made net losses of one and seven funds respectively. As a result, the number of individual funds held across the benchmarks fell from 182 to 169.

The cuts were in contrast to the last rebalancing in May, when the panellists increased the total number of funds by 13. Thirty-eight funds were ejected in November and just 25 new portfolios were brought in.

Products from five previously unrepresented groups – HSBC Investments, Credit Suisse, Lloyd George Management, Prudential and Troy Asset Management – joined the AFI.

However, nine firms left the indices – Barmac Asset Management, Close Investments, Insight Investment, JO Hambro Capital Management, Lazard, Lincoln Unit Trust Managers, Morant Wright Management, Sarasin Chiswell and Skandia Investment Management. Lazard lost four funds in total, the most of any group.

Neptune was the biggest winner, with a gain of three funds. The firm’s balanced fund was added to the Balanced and Cautious AFIs, while global alpha joined the Aggressive index. One adviser also selected Neptune UK equity for all three indices. The additions bring the total number of Neptune funds in the AFI to seven. Axa Framlington and Fidelity International made gains of two funds each.

Of the new arrivals, the most popular was New Star international property. The £400m fund, which launched earlier this year, invests in a mixture of physical property and securities. The bricks and mortar portion of the fund – around 80 per cent – is run by Roger Dossett. The remaining 20 per cent is held in property securities and cash.

The fund was selected 11 times across the three AFIs during the rebalancing, despite overall reductions in property weightings by the panellists. Property fell by one, two and three percentage points in the Aggressive, Balanced and Cautious indices respectively.

As a result, Skandia global property securities and L&G UK property trust left the AFI completely.

The biggest asset allocation shift was a four percentage point increase in the weighting to Asia-Pacific equities in the Aggressive index.

The move reflected positive views on the region from the panellists in the mid-season AFI questionnaire, conducted in August. Weightings to the region also increased by one percentage point in the Balanced and Cautious indices.

However, allocations to North America remained stable, despite negative views in the survey. North America was selected as the worst-performing region over the next one and five years by five and four respondents respectively. The panellists ejected GAM North American growth from the AFI but added Axa Framlington American growth and Prudential North American.


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