Rathbone recovery takes on special sits war horses
Share
Recovery Fund
Type: Unit trust
Aim: Growth by investing mainly in a portfolio of UK and European equities with the potential for a share price recovery
Minimum investment: Lump sum £1,000, monthly £100
Investment split: Up to 100% in UK equities, up to 20% in European equities
Isa link: Yes
Charges: Initial 5.5%, annual 1.5%
Commission: Initial 3%, renewal 0.5%
Contact: www.rutm.com
Rathbone Unit Trust Managers has created the Rathbone recovery fund by merging its smaller companies and special situations funds.The new fund will aim for growth by by investing in 50 to 60 stocks of companies with recovery potential that is not recognised by the market. These stocks will be sold when this potential is recognised.
Bright Financial Services director Paul Breaks says: "This is the old special situations and smaller companies funds renamed.The aim being to offer growth prospects without the levels of volatility exhibited by the two former funds."
He says this will be achieved by having a greater exposure to FTSE 100 and 250 stocks and a European content of up to 20 per cent. He adds that it will be benchmarked against the FTSE All-Share index.
"The objective is to buy shares in companies whose recovery is not appreciated by the market, and to then sell them when this potential is recognised," says Breaks.
He likes the target weightings that will include small cap and Aim stocks at between 5 and 20 per cent each. He also likes the European exposure.
Turning to the less appealing aspects of the fund Breaks says: "Charge-wise, it is not cheap at 5.5 per cent initial and an annual management charge of 1.5 per cent. No doubt the total expense ratio will be in excess of 2 per cent, which, given the downward pressure building on charges is not stealing a march," says Breaks.
Looking at the market for potential competitors Breaks says:"The competition is, of course, the old M&G and Fidelity special situations war horses with their strong track records and greater name awareness. There are also a number of others including Blackrock and Gartmore."
Summing up, Breaks says: "Timing wise, it could do well if the economic recovery arrives sooner than thought,say, early next year. Otherwise it may struggle short term."
BROKER RATINGS
Suitability to market: Average
Investment strategy: Good
Adviser remuneration:Average
Overall 6/10
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