Type: Oeic fund of funds
Aim: Growth by investing in a portfolio of environmental funds that invest in companies that benefit from climate change and population growth
Minimum investment: Lump sum £5,000, monthly £100
Investment split: 100% in a portfolio of environmental funds and cash/near cash
Isa link: Yes
Charges: Initial 5.25%, annual 1.5%
Commission: Initial 3%, renewal 0.5%
Tel: 01202 890 895
The Way green portfolio fund is a fund of funds that invests in funds with strong track records in sectors such as forestry, clean water and alternative energy.
Discussing the market suitability of the fund, Newbegin says: “At a time when interest in environmental issues is at an all-time high, the launch of this fund of funds makes for good timing. Not only that, but with the advent of Retail Distribution Review and many IFAs struggling to justify expertise in quality asset allocation skills, a fund of funds approach could be one solution.”
He notes that Way’s forte is in fund management, where it has forged an innovative and specialist style, and thinks the fund of funds approach fits in comfortably.
“The Way green portfolio fund’s priority is for capital growth with the potential for income growth through thematic investment, such as climate change and sustainability, in a diversified portfolio of collective investments, investment trusts, other transferrable securities, cash or near cash – including deposits and money market instruments.”
Newbegin feels the fund has made an encouraging start in performance terms, and mentions the ability to use the fund in conjunction with Way’s IHT mitigation and income plans.
“A minimum lump sum of £1,000 and £100 a month gives most investors the opportunity to invest in a sector which has huge potential, while at the same time ensuring that not all ones eggs are in the one basket,” says Newbegin.
Duncan Carmichael-Jack who joined Vestra Wealth in 2007, heads up the fund and Newbegin says he is relatively unknown among many IFAs. “He previously worked at UBS, Laing & Cruickshank, and Credit Suisse, where he was an equity manager. He currently manages Vestra’s Elite balanced and Elite income unit trusts.”
Looking at the less appealing features of the fund Newbegin says: “The charges are higher than normal at 5.25 per cent initial and 1.5 per cent annual. Of course there are the added charges of the underlying funds.”
He adds that there are some unfamiliar fund choices which include offshore funds and he thinks this may initially hold back new business growth for the Way fund. “Some IFAs may baulk at some unfamiliar fund choices but I like the mix as it shows innovation and I am sure good performance will persuade some to recommend this fund to their clients. Its limitation of course is that it will only attract adventurous investors,” he says.
Newbegin says there very little competition for Way with the same themes but feels closest match would arguably come from Skandia’s ethical fund which has a mix of funds and direct equities, and Aberdeen’s multi-manager ethical portfolio fund. “I suspect that the main competition will come from discretionary management services but the main advantage of a fund of funds approach is being able to change asset allocation without CGT implications,” he says.
Summing up, Newbegin says: “For many ethical and green specialist IFAs with existing ethical investment clients, this fund’s screening processes may be too biased towards positive criteria with no obvious evidence of avoidance criteria. However, for clients who want to “do their bit” but primarily are looking for good investment performance this fund offers the potential to deliver.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average