Funds targeting income have seen a resurgence of interest among advisers with interest in capital accumulation funds waning at the same time in Q2, according to research consultancy firm Square Mile. 

Income-related fund research had been in decline since Q3 2023, according to the report.

It accounted for 32% of adviser searches by the first quarter of this year, when it was outstripped by capital accumulation, which registered a 46% share. 

The report - the quarterly Market Intelligence Report - showed that the trend was turned around in Q2, with income funds once again being the most researched, making up 44.2% of all searches, comfortably ahead of capital accumulation at 38.5%. 

Capital preservation and inflation protection as investment outcomes remained out of favour at 9.6% and 7.7%, respectively, according to the report.

There was a shake up in adviser research into responsible investment funds, with the T Rowe Price Global Impact Credit, Schroder Global Cities Real Estate and Wellington Global Impact funds moving into the top three positions for responsible fund research, accounting for 21.3%, 17.2% and 13.9% of searches respectively. 

The most-viewed active fund overall was once again WS Havelock Global Select with a 15.8% share, while the Principal Global Investors Finisterre Unconstrained Emerging Market Fixed Income fund and Guinness Global Equity Income funds debuted in the top three with respective shares of 7.6% and 6.9%.

Boutique fund house Havelock also remained in pole position as most viewed fund group at 10.4%. However, with a 9.7%, share, Schroders was a close second, rising from fourth place in Q1 – an increase of 5.7 percentage points. T Rowe Price was the third most popular with 8.5%, up 7.9 percentage points on the previous quarter. 

Liontrust was once again the most researched asset management company offering risk targeted strategies accounting for 21% of searches.

However, Rathbones saw a strong 5.1 percentage point increase in views to 14.2%, placing it second and pushing HSBC Global Asset Management to third place with a 12.3% share. 

There was also a shift in adviser interest in groups offering passive strategies. While, with a share of 29.5%, Vanguard remained most popular, this was a decrease of 10.5 percentage points on Q1. BlackRock’s share of views also fell, registering a drop of 6.8 percentage points and pushing it into third place, while Legal & General gained ground to second place accounting for 22.9% of searches.

Scott Dakers, business development director at Square Mile, said: “After several quarters of steady decline, it is interesting that income producing strategies are once again gaining adviser attention. 

“Overall, the economic stage looks set to be supportive for both equities and fixed income assets. Nonetheless, events such as the US presidential elections, continued geo-political risk and a level of uncertainty over inflation and the direction of interest rates may unsettle jittery investors creating some short-term volatility.”

Square Mile's quarterly MI Report is a register of viewing patterns among advisers using the Academy of Funds, a depository of insight and opinion on all 380 active, passive and risk targeted funds and investment trusts rated by the company's team of 21 analysts. It provides an indication of sentiment among fund selectors towards investment outcomes, funds and fund groups and asset classes.

Square Mile was acquired by Titan Wealth with the acquisition receiving regulatory approval in February.