Spiralling inflation around the world has seen an uptick in the number of times financial advisers have searched for ‘Income Protection’ products on Square Mile’s Academy of Funds, a depository of insight and opinion on the 334 funds rated by the company’s 20-strong team of analysts, as of the end of March 2022.
Its latest quarterly Market Intelligence Report, which looks at adviser viewing patterns, showed that ‘Capital Accumulation’ was the most searched outcome, with 44.9% of views, but ‘Inflation Protection’ continued to gain ground accounting for 17.4% of all views – up from 14.5% in Q4 2021.
Meanwhile, research on ‘Income’-oriented funds fell back considerably, dropping from 32.9% to 23.2%, and ’Responsible Investment’ fund searches accounted for just under a quarter of all views.
By sector, the most viewed was the IA UK All Companies, followed by the IA Sterling Strategic Bond and IA UK Equity Income.
‘Perfect storm’
Jock Glover, strategic relationships director at Square Mile, said: “The global backdrop has created almost the perfect storm for markets, as inflation and interest rates continued to rise, weak supply chains increased demand for goods, along with elevated energy prices and the geopolitical and humanitarian crisis unfolding in Ukraine.
“Combine that with a savage rotation into large cap value stocks and you have one of the toughest market backdrops we have seen in years.
“The UK equity market, which had lagged most global peers for some time, bucked the trend by rising slightly over the quarter, albeit with some volatile swings intra quarter. Most other global equity markets were also volatile and ended the quarter down single digit percentage points.
“Equity market volatility, as measured by the VIX index, more than doubled from 16.7 to 36.6 following the Russian invasion of the Ukraine, before drifting back to less elevated levels as the quarter ended.
“Meanwhile, yield curves in the West started to flatten as interest rate expectations rose at the short end of the curve driven by inflation expectations and central banks raising interest rates or reducing buyback programmes.
“Against this backdrop, it is perhaps unsurprising that over the first quarter of the year, we continued to see an increased number of users search for the inflation protection outcome on the academy of funds.”
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