The fear of rising inflation has been hitting households over the last few months and now advisers are looking to tackle the problem.
Concerns have been raised recently as inflation in the US hit 7% for the first time since 1982, and in December 2021 it rose to 5.1% in the UK.
According to Square Mile’s quarterly intelligence report, there was a growing number of advisers researching funds offering inflation protection as an outcome in Q4 2021.
This accounted for 14.5% of all searches within the Square Mile Academy of Funds, up from 4.5% in the previous quarter when it was the least researched outcome.
Capital preservation also gained ground with 13.2% of all views in Q4. Capital accumulation was still the most viewed outcome, however it fell back considerably to 39.9% from 52.2%, while income stayed static at 32.9%.
Asset classes
The report also found that, in terms of views by asset class, interest in fixed income continued to fall; its share of searches dropped to 27%.
This fall was mirrored by views of the IA Sterling Strategic Bond Sector which was the most viewed in Q3, but fell by 5.6% to third place in Q4.
Equities maintained their lead, accounting for 52% of all views, while multi-asset increased slightly to 20.1%.
Alternatives and property barely registered with 1% and 0.2%, respectively.
‘Growing sense of caution’
Jock Glover, strategic relationships director at Square Mile, said: “Developed equity markets ended 2021 higher than their starting point, but again this masked some volatility in late November and early December.
“In the bond markets, fears of more persistent inflation and central banks being forced to raise interest rates to combat it continued to move government bond yields higher.
“Given this challenging backdrop for bond markets, it is perhaps unsurprising that adviser interest in fixed income continued to weaken over the quarter, although the Artemis Corporate Bond fund bucked this trend to become the most viewed fund over the sector.
“And while capital accumulation continues to be the most researched investment outcome, its lead is being eroded by inflation protection and capital appreciation suggesting a growing sense of caution among advisers as they research investment options for their clients.”
