Christows has converted three offshore funds of investment trusts to onshore funds of funds that invest mainly in exchange traded funds. David Franklin, who managed the three offshore funds, will run the onshore funds.The funds will also hold investment funds and quoted securities and can hold cash to reduce risk when markets are volatile.
The managed growth fund is designed to outperform the FTSE All Share index, with an emphasis on UK equities and bonds although some investment will be made in other markets. The overseas growth fund is benchmarked against the FTSE World index (ex UK). The worldwide growth fund invests globally without excluding or favouring any regions.
Figures from Morgan Stanley show the ETF sector grew rapidly last year as markets recovered, with assets under management rising globally by 49 per cent to $211bn. However, in Europe, which lags behind the US market, assets under management rose by 83 per cent to $19.5bn.
Christows' decision to focus on ETFs may be a wise move if market growth spreads to the UK at the same rate as the US and other parts of Europe. However, Barclays Global Investors closed its sector-based ETFs due to lack of interest.
The funds are likely to appeal to sophisticated investors who understand how ETFs can enhance the diversification achieved by funds of funds and add a degree of versatility to a portfolio because they can be traded like shares.