The fund was the talk of the adviser community at launch with what was seen as an innovative approach of choosing 10 leading fund managers and their 10 highest-conviction stock picks. Fifty per cent of the fund was invested in the UK to gain specific attraction in that market.
On June 13, 2006, the product opened for business and the initial response was nothing but positive. According to Skandia Investment Management’s own figures the fund had managed to pull in £100m in adviser money and had risen by 8 per cent in the first month alone.
The 12-month figures were just as glowing, with the fund up by 30 per cent but at the three-year point, the £272m fund has only just scraped past its sector average, having fallen by 7.8 per cent compared with a sector average fall of 7.9 per cent. Hardly a bad set of results but not what some would expect, considering the marketing and advisers’ reaction at the fund’s launch.
The past 12 months have seen fourth-quartile returns, with the fund down by 26.4 per cent compared with the average fall of 21.1 per cent. Changes have been made to the portfolios, with Hugh Young, Stephen Whittaker and Roger Whiteoak making way for Dan Hanbury and Peter Sartori.
Skandia Investment Management fund manager Ryan Hughes says the fund performed well in the first two years before suffering from the equity sell-off.
He says: “Despite a challenging end to 2008, we have seen an upturn in performance recently, with the three and six-month figures reflecting the strong performance and natural abilities of the likes of Richard Buxton, Richard Plackett and Crispin Odey. In the past six months, the fund is 6 per cent ahead of the sector.”
Hughes says the firm does look regularly at changes to the portfolio.
He says: “We meet managers to keep up to date with what is going on. Some of the changes have been enforced through manager departures, such as Roger Whiteoak, which we have no control over. But we also have a reserve bench of managers ready to step in should we feel a change needs to be made.”
But not all adviser firms have been pleased with the changes. In October 2008, Bestinvest downgraded its rating of the fund, citing the number of manager changes and poor performance of the underlying managers.
At the time, Bestinvest research analyst Tom White said a rethink to a hold rating was needed following the quick changeover seen on the manager side. At that point, only four of the fund managers were rated by Bestinvest, when at one stage the figure was eight out of 10.
Hargreaves Lansdown head of research Mark Dampier says: “It has been disappointing but I would say there is nothing wrong with it that would affect my investment principles. One or two managers have not worked that well for the fund and it was launched at the top of the market and has been clobbered for that.”
Chelsea Financial Services head of investment Matthew Woodbridge says: “I would agree that it has struggled, given the managers that it has. You would have to place the fund in the medium to high-risk end of the market. It has done well before but it is not on our buy list at present.”