Property investment companies may be "hitting the mainstream" with advisers, 7IM has said, after they made up half of the most purchased closed-ended funds on its platform in the final quarter of 2017.
This edged up from two-fifths of adviser purchases in the second and third quarters of last year and was the most popular property investment companies had been since Seven Investment Management (7IM) started publishing the data in 2017.
In this last quarter, however, the purchases were all generalist, compared to previous quarters when these were in specialist property areas - including healthcare, storage and student property.
The investment manager looked at which investments were the most purchased by advisers in Q4 by value for open-ended funds, investment companies and exchange-traded funds (ETFs).
7IM senior investment manager Simon Moore said: "The Q4 data suggests that property investment companies may finally be hitting the mainstream since all those in the top 10 have a generalist mandate.
"In previous quarters, property specialists in niche areas of the property market have often featured."
"While this might be a one-off, it looks like advisers are looking at property open and closed-ended funds on an equal footing, rather than using investment companies when they want to go particularly specialist," he added. "Either way, the closed-ended structure of investment companies can be particularly well suited to accessing property and advisers clearly recognise that."
7IM also found more than half of adviser purchases were made via model portfolio (MPS) selections, which head of platform Verona Smith said may be reflected in some of the top 10 rankings.
"MPS selections are increasingly dominating adviser platform purchases, up from 38% in Q2, 47% in Q3 and 53% in Q4 2017," she said. "Advisers are clearly keeping an eye on costs, but the rise of MPS also suggests an increasing trend towards outsourcing."
Funds and ETFs
In terms of fund purchases, the firm's investment manager Tony Lawrence said it was interesting to see Polar Capital UK Value Opportunities feature among advisers' top 10, as 7IM had just initiated a big position in across its multi-manager funds.
"This is an unconstrained multi-cap equity portfolio, focusing on companies trading at a discount to their intrinsic value," said Lawrence. "With a balance of domestic and overseas earners, and with low correlation to the FTSE All-Share Index, this is a fund we rate highly and which we would expect to have some resilience in down markets."
"It is also interesting to see two Japan funds feature so strongly," he added. "Japan had a strong run leading into Q4, translating into renewed interest for the region, with the two Japan funds highlighted in the top ten suggesting that some advisers may be blending growth and value styles."
On ETF purchases, 7IM senior investment manager Peter Sleep said: "Q4 is reassuringly boring. Investors are buying gold, major equities indexes such as the FTSE 100 and S&P 500, and short duration bonds.
"Perhaps after a great run in 2017, advisers are staying with markets they know, where they will have strong liquidity, rather than seeking value in less familiar markets."
Most bought open-ended funds, investment companies and ETFs by value via the 7IM platform in Q4 2017
|Top 10 funds||Top 10 investment companies||Top 10 ETFs - includes one Exchange Traded Certificate (ETC)|
|1||JPMORGAN ASSET MANAGEMENT UK LTD JPM JAPAN C ACC||SCHRODER REAL ESTATE INV TRUST LTD ORD SHS NPV||ISHARES PHYSICAL METALS PLC ISHARES PHYSICAL GOLD ETC USD (GBP) ACC|
|2||SCHRODER UNIT TRUSTS TOKYO Z INC||STANDARD LIFE INVEST PROP INC TRUST ORD GBP0.01||HSBC ETFS PLC S&P 500 UCITS ETF|
|3||7IM AAP BALANCED||RIT CAPITAL PARTNERS ORD GBP1||VANGUARD FUNDS PLC FTSE 100 ETF INC UCITS ETF|
|4||M&G SECURITIES LIMITED M&G GLOBAL MACRO BOND I INC||WORLDWIDE HEALTHCARE TRUST ORD GBP0.25||SSGA SPDR ETFS EUROPE II PLC BB SPDR BARCLAYS 1-5YEAR GILT EUR|
|5||NEW CAPITAL UCITS FUND NEW CAPITAL GLOBAL ALPHA GBP X INC||CUSTODIAN REIT PLC ORD GBP0.01||ISHARES III PLC UK GILTS 0-5YR UCITS ETF GBP DIST|
|6||KAMES CAPITAL PLC PROPERTY INCOME B GROSS ACC||TR PROPERTY INVESTMENT TRUST ORD GBP0.25||ISHARES GBP CORP BD 0-5 UCITS ETF GBP DIST|
|7||DIMENSIONAL FUNDS ICVC GLOBAL SHORT-DATED BOND ACC NAV||CITY OF LONDON INVESTMENT TRUST ORD GBP0.25||VANGUARD FUNDS PLC S&P 500 UCITS ETF INC NAV GBP|
|8||POLAR CAPITAL FUNDS UK VALUE OPPORTUNITIES I GBP DIS||RUFFER INVESTMENT CO RED PTG PREF SHS GBP0.0001||SSGA SPDR ETFS EUROPE I PLC SPDR S&P 500 ETF USD NAV|
|9||7IM AAP MODERATELY CAUTIOUS||SCOTTISH MORTGAGE INV TRUST ORD GBP0.05||UBS ETF SICAV MSCI JAPAN UCITS A GBP DIS HDG|
DIMENSIONAL FUNDS GLOBAL CORE EQUITY GBP ACC
|F&C COMMERCIAL PROPERTY TRUST ORD GBP0.01||
ISHARES CORE GBP CORP BD UCITS ETF GBP DIST
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