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Clerical changes track

CLERICAL MEDICAL

FTSE 100 Tracker Fund

Type:
Oeic

Aim:
Growth by tracking the performance of the FTSE 100 index

Minimum investment:
Lump sum £10,000,
monthly £400,
Isa lump sum £3,000,
monthly £200

Investment split:
100% in UK equities

Isa link:
Yes

Pep transfers:
Yes

Charges:
Initial 4%,
annual 1%

Commission:
Initial 3%,
renewal 0.5%,
Isa/Pep transfers initial 0.5%,
renewal 0.5%

Contact: https://ifa.clericalmedicalsecure.co.uk/ads/oeics

Clerical Medical&#39s FTSE 100 tracker fund, managed by Insight Investments, aims for growth by tracking the performance of the UK stockmarket via the FTSE 100 index.

Franklins Financial Services partner Neil Franklin regards the company&#39s name and reputation as a strong point. Although he likes the fund&#39s charging structure and views the commission as good, he does not see why the charges are the same as Clerical Medical&#39s managed Oeic funds.

Franklin feels there is little to dislike about the fund, but there are some points raised in the literature that he takes issue with. He says: “Who cares who manages an index tracker? Simplicity and taking some of the decision making out of investment sound good but are worthless and in practice some trackers are better than others. All trackers should lose out to the FTSE 100 because of the charges but this is not mentioned in the literature.”

The literature also says that diversification is provided by the fund as it invests in a range of securities. But in Franklin&#39s view diversification is a weak point of tracker funds as the 10 largest stocks represent around 45 per cent of the index. He also points out that these 10 stocks are in a limited area of the investment universe.

Franklin says: “There is little or no emphasis on the risks associated with index tracking. There is no explanation of how few index trackers actually follow the index historically. There is no mention of how this investment should be used in a portfolio. There is no mention of volatility, especially with a graph versus building society deposits.”
He concludes that all index trackers will provide competition and cites Legal & General and M&G as examples.

BROKER RATINGS

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

Overall 7/10

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