Type: Oeic fund of funds
Aim: Income and growth by investing in a range of asset classes through M&G investment funds
Minimum investment: Lump sum £500, monthly £10
Investment split: 100% in equities bonds, property and fixed income sectors such as leveraged loans and collateralised debt obligations through M&G investment funds
Isa link: Yes
Pep transfers: Yes
Charges: Initial 4%, annual 1.5%
Commission: Initial 3%, renewal 0.5%
Tel: 0800 328 3191
M&G’s cautious multi-asset fund is a fettered fund of funds investing in a range of asset classes.
Michael Philips proprietor Michael Both says: “Heading a new fund with an AAA Citywire rated manager is always going to grab investors’ attention, and rightly so. By restricting the funds used to internal M&G funds, the total expense ratio has been kept to a very reasonable 1.75 per cent, which puts it at a competitive advantage to unfettered manager of managers and funds of funds.
He notes that since beginning a good rise from the lows of 2003 to April 2006, markets have been unsettled due to a combination of factors such as the possible resurgence of inflation. “ This uncertainty has encouraged investors to seek safe, all-weather returns above cash. Talking the talk is the easy bit but, just possibly, David Jane might deliver. “
Both complains that the literature is long on generalities but short on specifics. “The fund aims to be a one-stop solution by offering almost any type of investment class in the appropriate mix at the appropriate time, which is a very tall order indeed and inevitably rather subjective.
“The benchmark is the IMA Cautious Managed index, which is pretty meaningless to most investors. I would have been more comfortable if there was also an absolute return goal such as inflation plus 3 per cent or Libor plus 3 per cent.”
Discussing the negative aspects of the fund Both says: “Restricting investment to M&G funds may mean other top funds are ignored. Although in practice, the better understanding of in-house funds and what they add to the overall mix may more than compensate. As good as David Jane undoubtedly is, I would still like to know what asset mix he will set at launch and what broad parameters he expects to hold over time. Without this information it is nigh on impossible to know how to fit in into a client’s portfolio in order to give the appropriate overall asset weighting.
“I am extremely wary of advising clients to buy a “black box” since I fear that, like it’s namesake in aircraft, I will only find out the problems when it falls on my head -closely followed by the regulator who will, not unreasonably, blame me for not knowing what was happening just before the crash.”
He thinks competition could come from F&C multi-manager cautious and possibly the new Fidelity multi asset Ssrategic fund.
Summing up Both says: “ With the recent introduction of non-UCITS retail schemes further widening the range of investments permitted within retail collective funds, it is likely that M&G will be joined by many more funds all jumping on the same bandwagon of “cautious Martini funds” investing any time, any place, anywhere.
Suitability to market: Good
Investment strategy: Good