View more on these topics

Cautious consensus

The rebalancing of the FE Adviser Fund cautious index in November shows a series of defensive allocation moves following a volatile period for equities. Asset allocations show panellists allocated away from equities, property and fixed interest and increased their allocation to cash.

Weightings towards UK equities in the cautious index lost 1 per cent twice in 2011, in the May and November rebalancing of the index, taking the allocation down to 23 per cent. North American equities and other international equities both lost 1 per cent, dropping to 5 per cent and 3 per cent respectively.

Allocations to property, European equities, Asia-Pacific equities and structured products all remained unchanged during November’s rebalancing. Allocations to “unknown” were up by 4 per cent to 12 per cent. Cash weightings rose from 5 per cent to 7 per cent.

The sector breakdown displays a similarly cautious consensus. The biggest loser was corporate bonds, down by 7 per cent at the latest rebalancing, taking its weighting to 18 per cent. Other fixed interest gained 4 per cent. FE AFI panellists see this as evidence that investors have become increasingly cautious.

Rowan Dartington head of collectives research Tim Cockerill says: “My immediate take is that there has been a sharp derisking of the portfolio. It is interesting that investors have chosen government debt over corporate bonds.”

Analysing the geographical breakdown, panellists allocated 2 per cent each to Australasia, international and cash. Oddly, 1 per cent was also allocated to Europe excluding UK. After May’s rebalancing, European allocations were historically low at just 8 per cent.

Allocations to the Pacific Basin fell by 2 per cent, from 3 per cent to 1 per cent. The UK, North America and other all lost 1 per cent while Japan and Asia Pacific were static at 1 per cent each.

Cockerill’s pick of a suitable fund for cautious investors in this environment is the M&G corporate bond. This seems to match the consensus of the panel as a whole – not only is M&G the most popular provider in the balanced index in November’s rebalancing but it is also the top provider in the cautious index, with L&G in second place.

Cockerill says: “M&G is inherently conservative. It has a clear macro view and over the past few years it has been pretty accurate. It also sticks to its views and this is a key strength.”

M&G’s placing in the cautious index is owed predominantly to the same two funds that ranked highly in the balanced index – the M&G optimal income and property portfolio funds.

In order, the top five funds chosen by the panel were M&G optimal income, Legal & General dynamic bond, Artemis income, M&G property portfolio and Newton global higher income.

Data supplied by FE



FOS continues to see inaccurate complaints from CMCs

The Financial Ombudsman Service is concerned that claim management companies are continuing to submit incomplete and inaccurate complaints on behalf of investors as it tries to weed out spurious complaints. The FOS says it has done a lot of work with claim firms to address spurious complaints and cites examples where claim firms have submitted […]

Death of ex-Schroders UK equities chief Jim Cox

Former Schroders head of UK equities Jim Cox died last week. Cox, who was in his early 60s, built up Schroders UK enterprise fund to over £1bn in assets at the end of the 1990s. He retired from Schroders in 2000 and worked on a part-time consultancy basis for Alta Advisors, a private investment office […]

Commercial breaks

The proposed changes on tax for non-domiciles offer a range of opportunity to invest in businesses


News and expert analysis straight to your inbox

Sign up


    Leave a comment