- The mass-affluent financial adviser who often relies on tax wrappers targeting the clients with net wealth of £50,000+;
- The retail bank wealth manager who relies heavily on package products targeting clients of £100,000+;
- The high net worth (HNW) independent advisor who will increasingly target specific client types such as City-based executives, and who can be viewed as having net wealth of £250,000+,
- The ultra high net worths (UHNW) with £500,000 - £10m, which SEI believes will grow significantly within the next couple of years.
Responses from IFAs, including panellists of the Adviser Fund Index, did not agree with the report's conclusions about client segmentation and what it saw as business opportunities through 2009 for intermediaries looking to handle clients in the ongoing economic and business climate.
The intermediaries' responses highlighted a number of funds and product areas that they felt would be important through the coming year - possibly for all types of clients. However, Trustnet data also suggests that the recent past performance of a number of fund sectors will make choices far from easy.
Cautious Managed funds
According to Trustnet.com, in the 12 months up to the third week of December, only two out of 144 cautious managed funds delivered positive returns in the past year - although that list widened out to three funds by the close of play on 24 December: Ruffer Total Return, Arch cru Investment Portfolio B, and Arch cru Income.
The list of poor performers showed that, while a cautious managed approach may be favoured in some quarters, it may not have done investors any favours.
| Name of fund | 1 yr | 3 yrs | 5 yrs |
| Premier Brunel Distribution Portfolio Acc | -41.8 | n/a | n/a |
| CF Gresham Def US Accelerator Index A | -39.9 | -29.5 | n/a |
| New Star Managed Distribution Inst Inc | -36.4 | -33.5 | -15.7 |
| CF Miton Cautious Income A Inc | -32.2 | -24.5 | -1.6 |
| Premier MultiAsset Distribution Acc | -31.2 | -23.8 | -2.7 |
| CS MMgr MultiAsset Distribution Acc | -30.3 | n/a | n/a |
| CF Midas Balanced Income | -29.7 | -20.9 | 6.2 |
| City Financial Multimanager Income | -29.5 | -16.5 | 28.6 |
| S&W Charity Value and Income Acc | -28.4 | n/a | n/a |
| Premier Discovery Balanced Acc GBP | -27.2 | -20.3 | n/a |
Source: Trustnet.com
Mixed asset funds
Relying on mixed asset funds has proved to be the right move, according to data on a number of funds - and proof too that asset allocation is still key to ensuring positive returns are maintained and wealth retained. Eight mixed asset funds have delivered double-digit returns in the year to the third week of December.
| Name of fund | 1 yr | 3 yrs | 5 yrs |
| CF Ruffer Total Return O Inc | 16.0 | 19.9 | 52.3 |
| CF Mermaid | 12.8 | 19.9 | 55.8 |
| CF Primrose | 11.8 | n/a | n/a |
| CF Walnut | 11.8 | 23.8 | 59.3 |
| CF Windrush | 11.5 | n/a | n/a |
| CF Miton Strategic Portfolio A GBP | 11.0 | 16.6 | 49.3 |
| CF Aspen | 10.7 | 21.1 | n/a |
| CF Buxton Acc | 9.3 | 23.1 | 63.7 |
| CF Ruffer Equity & General O Inc | 7.5 | 8.4 | 32.2 |
| CF Triple Six Investment | 6.9 | 13.7 | n/a |
Equity funds:
On the basis of recent past performance, it is perhaps no surprise that the top performing equity fund to the third week of December - the Neptune Japan Opportunities fund - has outperformed. Indeed, it has outdone the next-best performing fund by more than five-fold in the past year. In addition, four of the top ten funds are Japan-focused equity funds.
The question facing investment intermediaries will be, however, what of the coming year? The past few days have seen even the most successful Japanese companies such as Toyota warn that they are likely to make losses through the coming year as key sectors, such as automobiles, have seen sales fall off a cliff.
| Name of fund | 1 yr | 3 yrs | 5 yrs |
| Neptune Japan Opportunities A Acc | 81.1 | 25.7 | 122.2 |
| CF Morant Wright Japan A Acc | 14.9 | -7.8 | 55.2 |
| CF Ruffer Absolute Return C Acc | 14.4 | n/a | n/a |
| Fidelity Japan Smaller Companies | 12.7 | -30.6 | 20.7 |
| Franklin Templeton Franklin Biotechnology A Acc | 12.1 | 3.6 | 23.8 |
| Jupiter Financial Opportunities Inc | 7.5 | 26.3 | 98.4 |
| Quadris Environmental Fixed Rate Acc GBP | 6.8 | 25.5 | 39.2 |
| RBS Protected Investment UK Growth 1 | 4.7 | n/a | n/a |
| AXA Framlington Biotech Acc | 4.3 | 3.9 | 16.0 |
| Jupiter Japan Income Acc | 3.8 | -5.7 | n/a |
Source: Trustnet.com
Fixed Interest funds
Many intermediaries see fixed interest funds as a haven in these times. This view does not look like changing anytime soon, as recent performance figures suggest eight of the top ten fixed interest funds have delivered returns higher than 40 per cent in the past year.
| Name of fund | 1 yr | 3 yr | 5 yrs |
| M&G International Sovereign Bond A Inc GBP | 53.4 | 50.0 | 52.5 |
| Scot Wid Overseas Fixed Interest Inst Acc | 49.0 | 45.3 | 47.9 |
| SWIP Global Bond Plus A Acc | 47.4 | 37.1 | n/a |
| Threadneedle Global Bond 1 GBP | 45.1 | 41.4 | 46.9 |
| Henderson Overseas Bond A | 44.1 | 38.8 | 40.4 |
| SG International Bond Inst | 43.7 | 42.4 | 46.2 |
| Threadneedle Target Return Ret Acc GBP | 42.2 | n/a | n/a |
| Henderson Global Bond | 41.6 | n/a | n/a |
| Schroder International Bond Inst Acc | 39.3 | 38.5 | 46.8 |
| Newton International Bond SIS GBP | 39.0 | 37.2 | 48.2 |
Source: Trustnet.com
Property funds
Property as an asset class naturally dominates the headlines currently with warnings not only that investors could see the value of their homes fall further, but also that yields on commercial property investments could follow capital values down as the UK economy continues to shrink.
Property funds have struggled to perform in the last year with data through the third week of December suggesting just one fund delivered postive returns in the past twelve months, and eight of the top ten returned double-digit negative returns.
| Name of fund | 1 yr | 3 yrs | 5 yrs |
| Tri FCM Salamanca Global Property Inst GBP | 1.7 | n/a | n/a |
| LV= UK Property Ret Acc | -9.7 | n/a | n/a |
| Threadneedle UK Property Acc | -10.0 | n/a | n/a |
| Margetts Greystone Property Acc | -11.7 | -7.8 | n/a |
| Royal London Exempt Property Acc | -13.0 | 4.0 | 42.8 |
| L & G UK Property Trust Inst Acc | 4.60 | -13.7 | n/a |
| CF Canlife UK Property Jersey Acc | 0.00 | -15.5 | 6.9 |
| Stan Life Inv UK Prop Trust I | -17.9 | -7.2 | n/a |
| New Star International Property Inc GBP | 4.24 | -18.0 | n/a |
| Ignis Asset UK Property Inc | 5.48 | -18.4 | -20.2 |
Source: Trustnet.com
Cash
The run to cash deposits looks set to continue; Judging by relative performance against other assets and fund sectors, even if UK interest ratest were to go negative, the risk premium demanded by investors to put their capital into equities may be of such a magnitude that retail investors will still sit on their hands and keep their cash in the bank. Government paper looks competitive on this basis.
Structured products
A number of IFAs continue to see structured products as a viable sector in which to steer clients' monies. Wider thoughts on the viability of hte sector were expressed in Trustnet's recent Structured Products Roundtable
Portfolio preferences for long-term savings
What may be seen as typical portfolios for long-term savings goals are likely to be scrutinised as ever before, according to the segmentation issues brought up by SEI. The past year has been difficult for all who are used to taking a view on what is the correct portfolio to build, given that any that have retained equities exposure will have suffered - even in the face of long-term data suggesting investing in equities will provide better returns than other asset classes. Volatility has been a particular bug-bear: while it may have contributed to making even worse any losses experienced over the past 12 months, to wish for lower volatility going forward could actually make it harder for portfolios to recover to levels seen at the last stock market peak in mid-2007.
History suggests that 18 months into a stock market downturn, that there should be growing probability of improvements occurring to asset prices. However, markets are still pricing in, say, continued shocks to fixed income markets - such as 1930s level corporate bond defaults - while none of the long-term asset performance data may be of much comfort to intermediaries' clients who may be looking at retirement anytime in the next few years.
Scottish Widows Personal Pension Plan - Churchill Investments Growth Portfolio:
| Name of fund | Allocation | 1 yr | 3 yrs | 5 yrs |
| Schroder UK Alpha Plus | 15% | -35.9 | -16.3 | 15.8 |
| Scottish Widows UK Opportunities | 15% | -28.6 | n/a | n/a |
| Blackrock UK Dynamic | 15% | -36.3 | -19.2 | +27.0 |
| Fidelity Global Special Situations | 15% | -38.8 | n/a | n/a |
| Scottish Widows European | 8% | -29.06 | 2.70 | 49.45 |
| Scottish Widows Fidelity South-East Asia | 7% | -31.26 | 24.91 | 87.64 |
| Scottish Widows Emerging Markets | 5% | -37.96 | -12.52 | n/a |
| Invesco Perpetual Corporate Bond | 10% | -8.1 | n/a | n/a |
| Schroder Global Property Securities | 5% | -30.0 | -17.7 | n/a |
| Scottish Widows European Real Estate | 5% | -28.73 | -27.72 | n/a |
| Total | 100% | |||
| Cash | 2.40% | |||
| Fixed Interest | 12.92% | |||
| Property | 10.00% | |||
| Equities | 74.70% | |||
| Total | 100% |