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Close Plays FTSE

Dilke-Wing says: “The main useful features and strong points of the product are that it provides access to a selected sector of stocks that is not available in a directly comparable form in any other packaged product. The Pep transfer option is also very useful.”

Bloom says: “It covers indexation of very immature European technology stocks. It also saves on very expensive and difficult stock analysis in an emerging sector of a zone which has yet fully to embrace an equity culture.”

Parvaneh thinks that as a new fund breaking new ground, it must be closely watched.

Discussing the investment strategy, Bloom says: “It covers all European technology indices except the UK. It is a natural arrangement considering the variation in fund management expertise in London and on the Continent.”

Parvaneh and Dilke-Wing point out that the only investment strategy is to track an index.

MacFarlane says: “Close Fund Management&#39s strategy to replicate the FTSE eTX Euro 50 index with this fund sits comfortably with its existing stable of funds, which I like. Investors will need to be made aware of the limited global diversity of this fund – European only.”

Identifying the disadvantages of the fund,, Parvaneh says: “Being a tracker fund it will not be able to benefit from stock picking opportunities.”

Dilke-Wing says: “The disadvantages of the fund are that the managers are constrained by the limits of the stocks held in the index. If the sector looks ropy. the manager should not have any discretion to go into cash. Similarly, if opportunities arise in unrelated areas such as healthcare, it may be that the fund cannot take advantage.”

Bloom says: “It is strategically dangerous to restrict technology to mainland Europe. It is not exactly a zone recognised for its small company technology entrepreneurial flare. Also, the currency risk with Euros is now plain to see for even the most hidebound Europhile.”

MacFarlane says: “This fund has few disadvantages. However, investors will need to be aware of the niche market nature of the fund. Exposure is limited strictly to the European smaller cap technology stocks and the unloved Euro currency. The fund will not provide exposure to the US technology market that is generally considered the driving force of the new economy.”

Assessing the company&#39s reputation, the majority of the panel are positive. Bloom says: “It has a first class reputation in its many fields of endeavour and this will be no exception.” Dilke-Wing thinks Close Fund Management has a very good reputation at managing this type of fund. MacFarlane says: “It is excellent at what it does. It is an innovator in derivative and index funds.”

Parvaneh is out on a limb. He says: “It is fairly average. I think more PR is needed to get it across to the IFA market.”

Moving onto the company&#39s past performance, Dilke-Wing says: “Given the fact that most Close Brothers funds tend to be index related or in corporate guarantees, it is not a traditional management group to appraise. Within the boundaries of what it does, its performance is acceptable.” Bloom thinks it is strong in the very limited fields in which it plays.

MacFarlane says: “The investment past performance has been good achieving in most cases what the company has set out to do in the field of tracking with a high degree of correlation to the chosen indexes.”

Turning to the fund&#39s prospective competitors, Parvaneh cites Aberdeen European technology. Dilke-Wing suggests traditional technology funds including Aberdeen European technology and European smaller companies.” MacFarlane says: “Actively managed European technology funds such as Schroders and Aberdeen.”

Bloom thinks there are very few competitors at the moment but thinks this fund will trigger several more.

The panel is split over the issue of charges.


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