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Commodity-focused investment companies soar



The first quarter of 2022 saw a significant shift in investment company buys by advisers with commodities soaring in popularity as markets around the world were rocked.

According to data from the Association of Investment Companies (AIC) – compiled by ISS Financial Clarity – the Commodities & Natural Resources sector saw the biggest jump in popularity of any sector. 

Ranked by net demand, it rocketed from from 55th place the previous quarter to fifth place.

The AIC says commodities potential inflation-busting potential was a draw. It was also the best performing AIC sector in the first quarter of 2022, with a total return of 30%.

Overall demand for investment companies was depressed, however, with total purchases of investment companies on adviser platforms down 11% year on year.

Most UK-themed sectors saw positive net demand trends, with UK Smaller Companies jumping from 23rd place in Q4 2021 to fourth place in Q1 2022, UK Equity Income from 58th place to ninth, and Property – UK Residential from 61st to 14th. 

Property – UK Logistics bucked the trend, falling from the highest-ranked sector by net demand in Q4 2021 to the lowest-ranked out of 61 sectors in Q1 2022. 

One sector that did not change its position was Flexible Investment, ranked second by net demand in both the first quarter of this year and the final quarter of 2021. 

Total purchases of investment companies on adviser platforms reached £343 million in the first quarter of the year, up 2% from the previous quarter but down 11% from the same quarter of 2021, a record quarter for purchases. The level of purchases in Q1 2022 was the second highest ever. 

The AIC said that net demand on adviser platforms (purchases minus sales), in Q1 2022 was the strongest quarter for investment companies since 2018. Purchases exceeded sales by £109 million.

Nick Britton, head of intermediary communications at the Association of Investment Companies (AIC), said: “The first quarter of the year saw some big shifts in net demand for several investment company sectors on adviser platforms. There seems to have been a reappraisal of the attractions of the commodity and UK equity sectors in particular, perhaps in response to higher inflation and geopolitical concerns. 

“Stepping back from the detail, the general levels of purchases and net demand remained strong in the quarter, which was the second-strongest ever for total purchases and the best for net demand since 2018.”

 

Most popular sectors by net demand in Q1 2022














Q1 2022 ranking

AIC sector

Q4 2021 ranking

Change

1

Global

5

+4

2

Flexible Investment

2

n/c

3

Global Smaller Companies

7

+4

4

UK Smaller Companies

23

+19

5

Commodities & Natural Resources

55

+50

6

Infrastructure

9

+3

7

Environmental

8

+1

8

Renewable Energy Infrastructure

3

-5

9

UK Equity Income

58

+49

10

Asia Pacific

6

-4

Source: AIC/ISS Financial Clarity




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