Stockbroker Cheviot Capital has introduced a unit trust for the IFA market to be run along the same lines as its discretionary and advisory portfolio management services.
Cheviot Capital was established in 1993 as the investment arm of chartered accountants Kingston Smith. It currently runs a discretionary portfolio service and an advisory portfolio service, which have a combined value of £100m.
The CF Cheviot managed fund will aim for growth by investing initially in a mix of 85 per cent equities, 10 per cent fixed interest and 5 per cent cash. The company believes flexibility in asset allocation is the most important factor in achieving investment returns and holds monthly meetings to reach a collective view on regions and asset classes.
The fund will be managed by the investment team which is headed up by Phillip Arghebant. There will be between 40 and 50 equity holdings predominantly selected from the FTSE 100 index. Arghebant and his team will analyse individual stocks in terms of balance sheets, growth rate, profitability and cash flow. They are keen on companies yielding between 3 per cent and 3.5 per cent.
Kenneth Levy, chief executive of Cheviot Capital and former managing director of the Gerrard unit trust group, says the fund is biased towards the UK because it is showing signs of reasonable growth and valuations are attractive. Levy says corporate profitability in the US is set to improve due to cost cutting and reorganisation, which he also sees happening in the UK.
Asset allocation is becomingly increasingly important as investors chase positive returns in difficult markets and this fund's flexibility to match asset allocation to market conditions is a strong point. However, IFAs may prefer to recommend funds from established managers that have long track records and this may be a problem for Cheviot in attracting new money.