Medium risk investors should hike their property allocations and cut UK exposure, according to the 19 financial advisers and wealth managers on the FE Adviser Fund Index panel.
They raised the real estate allocation of the FE AFI Balanced Index to 6.40% from 4.23% in this month’s bi-annual rebalancing.
Conversely, panellists counselled cautious investors to trim property to 4.55% from 7.56% of their portfolios. In the previous rebalancing in February 2014, panellists recommended that both balanced and cautious investors double their exposure to property.
High and medium risk investors were advised to reduce their home market bias with exposure to UK assets cut by 2.25% and 1.64% in the FE AFI Aggressive and FE AFI Balanced indices, respectively, to 37.60% and 43.89%.
The FE AFI indices provide a snapshot of how the UK’s leading advisers are positioning portfolios for investors with different risk tolerances. Every six months, research and ratings provider FE solicits fund and asset allocation recommendations from its exclusive panel of advisers and wealth managers to suit high, medium and low risk investors. These allocations – drawn from current advice given by panellists to their own clients – are amalgamated into the FE AFI Aggressive, FE AFI Balanced and FE AFI Cautious indices.
Oliver Clarke-Williams, Research Analyst at FE, said: "What’s striking about the August rebalancing is how little has changed since panellists last submitted recommendations in February. A lot of our clients are concerned about their bond exposure, but there aren’t any obvious substitutes. After five years of booming markets (with the exception of the 2011 correction), many asset classes look overvalued and there is no safe haven. Diversification remains key, which is probably why panellists recommended that balanced investors increase their property exposure."
Panellists recommended the following property funds to medium risk investors: M&G Property Portfolio (the fifth most popular fund of the entire FE AFI Balanced Index,) Henderson UK Property, Threadneedle UK Property, L&G UK Property, Kames Property Income, SWIP Property Trust, Ignis UK Property and Premier Pan European Property.
The five most popular funds chosen for aggressive investors were, in order of preference: First State Asia Pacific Leaders, AXA Framlington UK Select Opportunities, AXA Framlington American Growth, CF Lindsell Train UK Equity and CF Odey Absolute Return.
At the other end of the spectrum, for cautious investors panellists recommended: Jupiter Strategic Bond, M&G Global Dividend, JOHCM UK Equity Income, Standard Life Investments Global Absolute Return Strategies and M&G Optimal Income.
The top five fund picks for balanced investors represented a mix of those funds recommended for low and high risk investors: First State Asia Pacific Leaders, Standard Life Investments Global Absolute Return Strategies, CF Lindsell Train UK Equity, M&G Optimal Income and M&G Property Portfolio.