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Cavendish aims to perform without benchmark

Cavendish Asset Management

Aim Fund

Type: Oeic

Aim: Growth by investing in companies listed on Aim

Minimum investment: Lump sum 2,500

Investment split: 80-100% in companies listed on Aim, remainder in cash

Isa link: No

Pep transfers: No

Charges: Initial 5%, annual 1.5%

Commission: Initial 3%, renewal 0.5%

Tel: 020 8810 8041

The Cavendish Aim fund aimed for capital growth by investing mainly in companies listed on the Alternative investment market.

Chase de Vere Financial Solutions research manager Justine Fearns points out that the Aim market has grown significantly since launch and has seen investor interest increase over the last few years, during a period where small cap and private equity stocks have generally offered better value with greater potential returns than their large cap peers.

She says: Due to the higher risk nature of the Aim market, if investors want to invest, I would always advocate a portfolio of stocks such as this fund as opposed to individual holdings.

Fearns thinks Cavendish Asset Management is a boutique with very strong credentials. It boasts a small but select stable of fund managers and some cracking performance on its longer standing worldwide and opportunities funds, she says.

According to Fearns, Paul Mumford, who is at the helm of this new fund, has an excellent track record at Cavendish, managing the opportunities fund since 1988. His stock picking ability and depth of experience in the industry are certainly a couple of reasons why investors will be interested in this fund. He is backed by Tim Roberts who, as a specialist in the UK mid and small cap arena, would appear to be a wise choice as joint manager on the fund, she says.

Casting an eye over the product literature, Fearns says: It is well written and easy to understand, though it does not go into great detail. The aims and objectives briefly touch on how the fund will be run; undervalued situations will be sought with no emphasis placed on a benchmark. The lack of emphasis on a benchmark is adopted by a number of investment houses now as investors strive for total, rather than relative, returns. Risks are laid out clearly and in enough detail so as to be informative but not overbearing for clients.

Discussing the charges, Fearns says: Although relatively high compared to some alternative funds, the charges are not out of kilter with other such funds so for this more specialist type of fund would be acceptable.

Turning to the potential drawbacks of the fund, Fearns says: As mentioned above, the Aim market carries more risk than the larger, more established markets. While Paul Mumford and Tim Roberts will manage this risk, it may be more than the majority of investors are willing to take.

She also feels Aim products are not suitable for all investors and, despite the potential for greater returns, will not always appeal as much as more mainstream funds. This, however, will probably work to the fund managers favour, as the fund is more likely to attract savvy investors, she adds.

Scanning the market to identify the main competitor Fearns says: Close beacon investment fund, is an established fund that will offer some competition to the Cavendish Aim fund. Unicorn Asset Management also has some funds that are able to invest in Aim-listed stocks. There are obviously differences between the funds. Some Aim VCTs could also provide competition, though once again there will generally be some different considerations.


Suitability to market: Average
Investment strategy: Good
Charges: Average
Adviser remuneration: Average

Overall 6/10


Two Year Fixed Special Self Cert Mortgage

Type: Fixed-rate self-cert mortgage

Fixed term: Until March 1, 2008

Fixed rate: 4.95%

Minimum loan: 25,001

Maximum loan: Up to 85% of valuation subject to a maximum of 500,000, up to 75% of valuation subject to a maximum of 1m
Income multiples: Up to 3.5 times principal income plus second or there times joint

Arrangement fee: 0.75% of original loan

Redemption fee: 6% of amount repaid until March 1, 2008

Introducers fee: 0.50% of original loan subject to a 250 minimum and 5,000 maximum

Tel: 0845 070 1999

Platforms Two Year Fixed Special Self Cert Mortgage offers a rate of 4.95 per cent fixed until March 1, 2008.

London & Country mortgage specialist James Cotton notes there has been a lot of competition in the self-cert market this year, with rates continuing to drop. This new special two-year fix from Platform offers a competitive rate of 4.95 per cent on a self-cert basis. The deal is available up to 85 per cent loan to valuation with no higher lending charge and there are no overhanging early repayment charges.

Assessing the fees Cotton says: The arrangement fee is 0.75 per cent of the loan which may be seen as a negative point, but as always, it depends on the individual case. For example, Platform also has a higher rate of 5.25 per cent, with a 495 fee, but this would cost more over the two years in most cases.

However, he feels the fee on the deal under the microscope is big and there will always be borrowers that are put off by it, even if the deal works out best overall. He also feels the early redemption charge is hefty at 6 per cent, while the deal offers little flexibility during the fixed period.

Considering which lenders will compete Cotton says: I think the big competition will come from GMAC, which has a 2-year fix at 4.95 per up to 85 per cent LTV. The rate is the same as Platforms, however its fixed fee of 545 and incentives, including 350 cashback, make this a superior product. BM solutions has a two-year fix at 4.69 per cent with a 1.5 per cent fee or 5.15 per cent with a 599 fee. The Mortgage Works has a 2-year fix at 4.49 per cent, again with a 1.5 per cent fee.

In conclusion Cotton says: Arrangement fees that are a percentage of the loan are becoming more and more popular. With these comes a greater need for brokers to do their sums when comparing deals.


Suitability to market: Good
Competitiveness of mortgage rate: Good
Flexibility: Poor
Adviser remuneration: Average

Overall 7/10


Flexible Plus

Type: Flexible tracker mortgage

Tracker term; Lifetime of loan

Tracker rate: 0.49% above Bank of England base rate

Minimum loan: 25,001

Maximum loan: Up to 90% of valuation subject to a maximum of 500,000, up to 85% of valuation subject to a maximum of 850,000, up to 80% of valuation subject to a maximum of 1.5m, up to 75% of valuation subject to a maximum of 2.5m, up to 70% of valuation subject to no maximum
Income multiples: Based on affordability and credit score

Flexible features: Overpayments, underpayments, payment holidays, lump sum withdrawals, interest calculated daily

Conditions: Free valuation up to 1,110 and free legal fees or 250 cashback for remortgages

Arrangement fee: 599

Redemption fee: Calculation based on the amount borrowed, the amount repaid and number of months borrower has been on tracker rate

Introducers fee: Refer to lender

Tel: 0870 6000 367

Abbeys flexible plus mortgage is a tracker mortgage with flexible features.
Brian Pack Financial Service principal Brain Pack says: This has a good interest rate for the life of the mortgage at 90 per cent LTV but the arrangement fee is quite high at 599.

He regards the high arrangement fee as a trend among most lenders and believes it is one of the ways to recoup some of the costs of regulation. The free valuation and 250 cashback are attractive extras. The income multiples are good and the early repayment charges are fair for the contract, he says.
He thinks competition will comes from Leeds Building Society, NatWest and Norwich & Peterborough Building Society.

In conclusion he says: Overall, this is an attractive contract with good appeal to the public.


Suitability to market: Good
Competitiveness of mortgagee rate Good
Flexibility: Good
Adviser remuneration: Average

Overall 8/10


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