Multi-managers turn attention to alternatives and cut equities in Q3
- On November 21, 2016
- By Kate Arnold
Source: Investment Week
The Polar Capital Global Insurance fund has topped the list of most commonly held funds in Q3 by multi-managers as demand continues to rise for alternatives, according to distributor Harrington Cooper.
Managed by Nick Martin, the £526m fund has returned 32% over the year to 15 November, beating both its MSCI World Insurance benchmark and the IA Specialist sector average, which have delivered 28% and 23% respectively, according to FE.
This comes amid a rising demand for alternatives, with average allocations up to a 30-month high of 13.2% in Harrington Cooper’s quarterly proprietary Asset Allocation Tracker.
Also featuring in the most commonly held funds among UK multi-managers and discretionary managers were Man GLG’s Undervalued Assets and Japan CoreAlpha funds, replacing GAM Star Credit Opportunities and Hermes Asia ex Japan.
The Henderson UK Absolute Return fund and BlackRock’s European Dynamic fund were also among the most widely held vehicles, according to the survey.
The report, which tracks the asset allocation of 32 multi-manager funds and model portfolios that follow a balanced risk profile with total AUM of £11.2bn, also found fixed income allocations saw the biggest increase.
Investors topped up fixed income holdings by 0.5% to 24.3%, with the £1.6bn Henderson Strategic Bond fund being the fifth most commonly held vehicle in Q3. This comes despite worries over the potential ending of the multi-decade bond rally.
The biggest allocation reductions were seen in equities, with European equity holdings down 1.1% to an average of 6%. Overall, allocations to equities were 0.7% lower in Q3, at 52.2%.
However, emerging market equity allocations reached a 30-month high, rising by 0.6% to 3.5%, as discretionary and multi-managers continue to seek value in the unloved sector.
Ahead of the US election, allocations to North American equities held steady at 8% of portfolios, but multi-managers moved out of Japanese equities in Q3, with allocations down by 0.5% to an average of 4%.
Meanwhile, average property allocations at the end of September stood at 2.3%, significantly lower than the average of 4.8% at the end of 2015.
This follows a difficult summer period for the sector, which saw a raft of popular UK open-ended property funds suspend trading and implement fair value adjustments on redemptions, after the UK’s vote to leave the European Union prompted an exodus from these vehicles.
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