Why are some advisers thinking capital accumulation trumps income strategies?

Financial advisers have switched focus when it comes to the investment strategies they are seeking out for clients, according to research, with a preference for capital accumulation over income.

Square Mile’s latest quarterly Market Intelligence Report shows more advisers researching investment strategies aimed at capital accumulation over the second quarter of 2025.  

With a more than two fifths (42.6%) share, capital accumulation overtook income-related searches (37%) over Q2 2025, in terms of research carried out via the Square Mile Academy of Funds.

There was also an uptick in searches for funds which can offer protection from inflation in Q2. At 5.6% it was still the least researched outcome. But this was up from 3.8% in Q1 and was the first increase in research into such strategies, after a steady decline for over a year.  

Uncertainty over the impact of Trump’s tariffs and fears that inflation may remain higher for longer than expected seem to be reflected in a renewed focus on funds with the potential of mitigating this risk.

Square Mile's quarterly MI Report provides a detailed account of viewing patterns among advisers using the Academy of Funds, a depository of insight and opinion on all 396 active, passive and risk targeted funds and investment trusts rated by the company's team of analysts.  

Drilling down to adviser research at asset class level, interest was broadly the same over the quarter, in a possible indication that advisers are keeping overall asset allocation largely unaltered.  

Equities remained the most viewed asset class, with a slightly reduced share of 55.7% (58.1% in Q1 2025) followed by fixed income at 21.7% (22.7% in Q1).  

Searches for multi-asset strategies picked up slightly by just over three percentage points to 20.9% while interest in alternatives and property as asset classes remained the lowest at 1.6% and 0.2% respectively.  

This pattern was repeated at IA sector level, with IA Global Equities (18.0%), IA UK All Companies (10.6%) and IA Sterling Strategic Bond (9.0%) remaining the three most popular.

John Lester, senior business development director at Square Mile, said: “Uncertainty continues to dog markets. Trump’s tariffs, announced with great fanfare at the very beginning of the last quarter, unsettled investor sentiment and led to fears of a resurgence of inflation, a slowdown in global growth and a trade war with China.  At the same time, the Russia and Ukraine conflict continues, while in the UK a shift in fiscal policy seems inevitable if the Treasury has any chance of balancing the books when meeting its new spending commitments.  

“In this context, it is understandable that research into both asset classes and IA sectors remained largely unaltered over the last quarter, potentially a sign that advisers are delaying any major shifts in portfolio exposures until there is greater clarity over where the winners and losers will lie.”

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