Both vehicles are managed by Roland Arnold, who seeks to invest in high quality, growing businesses.

Square Mile analysts said they consider Arnold to be a “pragmatic” investor who has proven to be adept in adjusting the risk profile of the strategy underlying both the fund and the trust at appropriate times during the market cycle.

The £633.1m BlackRock Smaller Companies Trust currently trades at an 11.7% discount to net asset value (NAV), according to the AIC.

Analysts at Square Mile conducted 66 interviews with investment professionals from 37 asset management groups during February.

Elsewhere, the Janus Henderson Global Equity Income fund has lost its A rating after a period of “challenged” performance.

According to FE Fundinfo, the strategy has returned 43.5% over the last five years compared to the IA Global Equity Income average 52.3%.

The analysts noted that the fund has always taken an approach that is highly defensive, non-cyclical and with a focus on income.

“However, its total return profile has not met [analyst] expectations and [Square Mile] no longer have sufficient conviction in the strategy to justify its continued inclusion in the Academy of Funds,” they said.

Matthews Asia Pacific Tiger fund has also been stripped of its A rating, having previously had its rating suspended in December following the departure of manager Sharat Shroff.

Shroff was replaced by Inbok Song as lead manager, who works alongside the firm’s CIO Sean Taylor.

The Square Mile analysts said: “Ms Song and Mr Taylor are in the process of re-invigorating the strategy, which includes adjusting the portfolio construction process. Although Square Mile’s analysts believe this to be a sensible course of action, as yet it is unproven.”

Schroder US Equity Income Maximiser and Schroder Income Maximiser funds have both retained their A ratings, despite the recent departure of manager Mike Hodgson.

Co-manager Scott Thomson was appointed as head of the team. Square Mile said its analysts have a high regard for Thomson and confirmed the two funds’ ratings would remain unchanged.

Similarly, UBAM Positive Impact Equity fund has retained its ‘Responsible A’ rating despite senior portfolio manager Rupert Welchman’s decision to exit the firm in April.

Despite his departure, the Square Mile analysts believe the team is well resourced and they have a high regard for the strong team-based process underpinning the strategy.

This article was written for our sister title Portfolio Adviser

The asset class pulled in a net €29.7bn in the month, while Money Market USD  was the best-selling Lipper Classification after receiving €11.2bn inflows.

Providers of mutual funds pulled in €22.5bn, while passives saw net inflows of €21bn.

Detlef Glow, head of Lipper EMEA research at LSEG, said: “Within the current market environment, it is not surprising that European investors bought further into money market products since the Eurozone and other major economies have an inverted yield curve. This means that money market products offer a higher yield than medium- or long-term bonds.

“More generally, long-term funds and money market products enjoyed inflows for the month. These flow numbers might indicate that European investors are further readjusting their portfolios to the current market environment.”

See also: Evelyn Partners adds to US equities and UK gilts in Core MPS rebalancing

Equity funds attracted €2.5bn net inflows in January, while multi-asset funds suffered outflows of €11.7bn. Investors also pulled €3.6bn from alternatives and €1.8bn from real estate funds.

By fund group, BlackRock’s €7.3bn net inflow was the best-selling among fund promoters in Europe, ahead of HSBC’s €6.7bn.

JP Morgan (€6.5bn), Axa Investment Managers (€4.3bn), and BNP Paribas (€4.0bn) all also saw strong net inflows.

The inflows occurred against the backdrop of an unstable market environment due to the geopolitical tensions in Middle East, especially the Red Sea, which increased in January due to concerns over prolonged delivery times caused by shipping companies having to avoid the Suez channel.

Glow added: “This month was somewhat business as usual. However, it is still surprising that European investors prefer bond funds over money market products, given the inverted yield curves in the major economies around the globe.

“In addition, it is noteworthy that one of the major trends from 2023 (actively managed US equity funds faced outflows, while ETFs enjoyed inflows) continued in January 2024.”

This article was written for our sister title Portfolio Adviser

ESG-focused funds recorded their first ever year of net withdrawals.

On a more positive note, gross annual flows were up on 2022, though they remained below the levels recorded in 2020 and 2021.

Passives dominate inflows

BlackRock attracted the most net new business for the 10^th consecutive year, pulling in £30.1bn gross retail sales and £6.4bn annual net flows.

Legal & General Investment Management also posted a strong year with a 26% rise in gross sales compared with 2022. It attracted £3.1bn net new business.

Fidelity and HSBC, meanwhile, also recorded strong net and gross flows. Between the four firms, 71% of new flows went into passive offerings.

Royal London Asset Management was the top ranked active fund manager for both gross and net sales. While in previous years it has seen the highest inflows into its sustainable funds, in 2023 its best sellers were short dated fixed income and money market funds.

See also: The Lang Cat: Advised platforms suffer record outflows in 2023

M&G and BNY Mellon were new entrants to the top 10 for gross new business after annual sales growth of 90% and 22% respectively.

M&G’s Japan and Emerging Markets Bond funds ranked among the best-selling retail funds over the year, while BNY Mellon’s Multi-Asset Balanced fund also received significant attention from retail investors.

Report editor Anna Pridham said: “Gross sales show that established groups like Schroders, Jupiter, BNY Mellon, and JPM are attracting significant new flows. However, as mature businesses, they also contend with high levels of natural outflows and switches.”

In terms of Q4 flows, most leading managers recorded a rise in gross sales compared to the previous three months.

Pridham noted that, against a backdrop of an impending general election in the UK and ongoing economic uncertainty, the outlook for asset managers in 2024 remains uncertain.

“However, with the prospect of easing inflation and anticipated interest rate cuts, investors may be finally ready to deploy the record amounts of cash waiting in the wings. The fund groups with the right products stand to benefit,” she said.

This article was written for our sister title Portfolio Adviser

Before the move to Morningstar, Bishun spent over three years as a senior investment solutions director at Brooks Macdonald, and has held roles at BlackRock, Barclays, Baring, and Citi. He worked at Barclays for 10 years, beginning as assistant portfolio manager and working his way to head of investment management for Channel Islands.

Launched in 2022, the Wealth Management Solutions group is designed to bridge Morningstar Wealth’s investment management with partner firms, which it hopes will “help advisers build centralised investment propositions”.

Ben Lester, head of distribution at Morningstar Wealth, said: “We are thrilled to welcome Chris to the Morningstar Wealth team. He brings a tremendous amount of experience and knowledge and we’re looking forward to working with him to enhance the service proposition we deliver to advice firms.”

This article was written for our sister title Portfolio Adviser

Investors pulled €2.6bn in (£2.2bn) net outflows from BNP Paribas in the month, the largest of any asset manager in absolute terms. The French asset manager leaked €6.3bn in the year as a whole.

iShares, known for its passive offerings, saw investors pull €1bn from its funds in December. The firm was hit with modest outflows of €26m in 2023.

Overall, Italian firm Eurizon was the asset manager with the largest outflows in 2023 at €17bn, followed by Credit Suisse at €14bn. BlackRock attracted the most cash, with inflows of €68.4bn.

European-domiciled funds as a whole attracted a net €49bn in 2023. Money markets pulled in €196bn, the second-best year on record for the asset class.

Passive strategies continued to capture the attention of investors, with a positive organic growth rate of 8.6% over the year. In contrast, active managers had a negative 2.1% organic growth rate, when excluding money market strategies.

Fixed income funds also enjoyed a positive year, with 4163bn flowing into the asset class. Meanwhile, equity funds attracted €17bn, though this was largely owing to a strong Q1.

In terms of individual funds, the £2.8bn passive UBS (CH) Fund Solutions MSCI USA SF Index fund received the most monthly inflows at £1.8bn.

The Swiss asset manager enjoyed a strong month for flows, with four funds among the top 10 for inflows.

At the other end of the scale, investors pulled £1.6bn from the UBS Multi Manager Access US Equities, leaving its net assets at £451m.

This article was written for our sister title Portfolio Adviser