FE Adviser Fund Index panellists double property allocation
A panel of UK financial advisers and wealth managers has recommended that balanced and cautious investors double their exposure to property to over four per cent from two per cent.
The recommendation is part of the latest rebalancing of the FE Adviser Fund Indices.
Property funds favoured by panellists include Henderson UK Property Trust, Ignis UK Property, M&G UK Property Portfolio and SWIP Property Trust.
For aggressive investors, panellists increased UK equity exposure by 2.76 per cent to 34.28 per cent, compared to the last rebalancing six months ago. Domestic equity is by far the largest allocation in the FE AFI Aggressive Index, followed by US equities at 15.86 per cent. Meanwhile, the allocation to global fixed interest was almost halved, slashed to 2.77 per cent from 4.91 per cent.
In terms of overall regional allocations, the FE AFI Aggressive and FE AFI Balanced indices both prioritised domestic assets, increasing UK exposure by 3.87 per cent and 3.01 per cent respectively.
Research and ratings provider FE draws fund and asset allocation recommendations for investors with different risk appetites from its exclusive panel of industry experts. The results are aggregated into three indices – FE AFI Cautious, FE AFI Balanced and FE AFI Aggressive – which serve as benchmark reference portfolios for the industry at large. The indices are rebalanced twice a year, in February and August.
The top fund picks for adventurous investors were, in order of preference: First State Asia Pacific Leaders, AXA Framlington UK Select Opportunities, Aberdeen Emerging Markets Equity, AXA Framlington American Growth and Lindsell Train UK Equity.
There was some crossover with the top five choices for balanced investors with First State Asia Pacific Leaders and Lindsell Train UK Equity appearing in both lists. Other picks for balanced investors include: Standard Life Investments Global Absolute Return Strategies, Newton Global Higher Income and Jupiter Strategic Bond.
Recommendations for cautious investors reflected their need for income: Jupiter Strategic Bond, M&G Optimal Income, M&G Global Dividend, Newton Global Higher Income and JOHCM UK Equity Income.
Rob Gleeson, head of esearch at FE, says: “UK equities performed strongly last year and the UK economy grew 1.9 per cent - the fastest growing economy in Western Europe. Sentiment continues to be positive this year so we were not surprised to see advisers increasingly backing best of British.
“With interest rates expected to rise, asset allocators are seeking income-generating assets other than fixed income. Real assets such as property are an obvious choice.”
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