Type: Offshore Oeic fund of funds
Aim: Growth by investing globally in equities and bonds through investment funds, with the ability to invest in commercial property and commodities
Minimum investment: Lump sum £1,000
Investment split: 14.9% UK equities, 14.2% global inflation-linked bonds, 9.6% absolute returns funds, 11.8% global equity funds, 9% property, 8% Asia Pacific equities, 6.9% UK corporate bonds, 6.3% US equities, 5.8% emerging market equities, 3.1% gold, 2.7% commodities, 7.8% cash
Place of registration: Dublin
Charges: Initial up to 5%, annual 1.5%
Commission: Initial up to 3%, renewal 0.5%
Tel: 020 7319 4000
Ingenious Asset Management has launched its global growth fund, a multi-asset portfolio that was previously available only to the firm’s discretionary clients.
Ingenious says the fund was launched in response to IFA demand for access to the Ingenious investment strategy of limiting losses in falling markets using an Oeic structure. It will take a fund of funds approach to invest in equities and bonds, with the ability to invest in commercial property and commodities where this helps to produce better risk-adjusted returns.
Discussing Ingenious Asset Management, the fund manager, Bulgin says: “Ingenious Asset Management was established in 2003 and as such is a new kid on the block. IAM offers an alternative to the more traditional approach adopted by the competition and as a private investors themselves, the team has applied the same techniques to the new fund as if they were managing their own money. So, modern techniques are used while maintaining a traditional approach to client service.”
Bulgin points out that Ingenious is mainly seen as an investor in media. “However this fund has no exposure to media. The thinking behind the investment process is based on three core beliefs: clients are not necessarily averse to taking risks, they are averse to losses; global multi-asset investing will ultimately provide the best risk adjusted returns; and finally that investing via collectives can further improve return and reduce risks,” says Bulgin.
Bulgin observes that the fund benefits from IAM’s proprietary risk modelling tool, known as efficient frontier. “This is a key point of differentiation over other funds in the same space. Efficient frontier identifies sources of risk within the portfolio and identifies ways of improving the efficiency of asset allocation,” says Bulgin.
A major attraction of the fund for Bulgin is that it can access a wide range of funds and other assets which may not be available to IFAs and retail investors. “Individual holdings of collectives are in institutional share classes and use is made of exchange traded funds and investment trusts where appropriate,” he says.
Bulgin points out that the fund aims to deliver a return substantially in excess of cash over rolling five year periods. He also highlights its exposure to a wide range of asset classes including commercial property and commodities.
“The fund is is benchmarked against the IMA Active Managed sector and currently around 50 per cent is held in lower risk asset classes such as cash, bonds, gold, property and absolute return funds. There is an overweighting in Asia and Emerging Markets which represents almost 14 per cent of the fund. This is to be applauded in that it is an active fund. Rather than slavishly following market weightings the fund manager is using a truly global approach and many commentators are of the opinion that growth will be derived from these sectors, rather than the larger but more moribund western economies,” says Bulgin.
He adds that IAM has a well thought through risk control process which takes account of factors such as price volatility, counterparty risk and manager risk. “This is backed up with qualitative and quantitative analysis. For instance bond exposure is usually limited to AAA holdings,” says Bulgin.
The manager of the IAM fund is chief investment officer Guy Bowles. “Guy has more than 25 years’ experience in managing global multi asset portfolios and in the quantitative analysis of investment risk,” says Bulgin.
Bulgin thinks that for many investors, the global multi asset approach will be attractive because it allows them to invest in a wide range of geographic sectors and asset classes. “The fact that there is active management is an added bonus and this should result in above average returns over the longer term. At present, the size of the fund is small at £25m. It is open to retail and institutional investors, and is listed on the Irish Stock Exchange. It is also available on most platforms,” says Bulgin.
Assessing the charges, Bulgin says: “Charges are standard with an initial charge of up to 5 per cent and the ability to rebate commission of up to 3 per cent. There is also trail commission of up to 0.5 per cent. The basic fund charge is 1 per cent but account needs to be taken of the underlying fund charges, which will make the total expense ratio higher by a significant margin.”
This leads Bulgin on to the potential drawbacks of the fund. “On the negative side the fund needs to deliver well above average returns on a consistent basis to match the returns from a low cost tracker.”
He adds that some advisers wedded to increasingly popular passive strategies and models that stick will fixed percentages in each asset class will be concerned that with this fund, allocations to different asset classes will be changed around in accordance with the fund manager’s views of future performance.
Identifying the main competition, Bulgin says: “The main competition will come from other multi manager and fund of fund offerings from Schroders, Swip, Jupiter and Henderson, as well as SEI and Russell.” He adds that it is a crowded sector, but thinks the IAM fund is well placed for the medium sized area where it can represent a big proportion of a portfolio. “In many ways can be likened to a low cost discretionary fund management proposition. It will also appeal to advisers who do not want to become actively involved in investment decisions and fund switches or rebalancing,” says Bulgin.
Summing up, Bulgin says: “In many ways there are many positive factors which make the IGGF a sound proposition and key to this is IAM’s efficient frontier modelling process, which itself is linked to controlling risk. This strategy should result in reduced volatility compared with other funds. Also there is no leveraging or use of derivatives within the fund.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Good