The company runs discretionary portfolios for private clients, charities, trusts and pension funds with a minimum investment of 300,000. But retail investors with less to invest can gain access to the same investment process through the Oeics with a minimum of 3,000.
UK equities and fixed-interest holdings within the CF Cornelian growth fund and CF Cornelian balanced fund will be managed directly by Cornelian investment director Marcus Brooks and his team of six investment managers. Overseas exposure and alternative asset classes such as property, private equity and hedge funds will be accessed through externally managed funds.
The funds will aim for absolute returns without the geographical and industrial sector constraints of a benchmark index. The growth fund is likely to have a greater exposure to equities and alternative asset classes than the balanced fund to reflect its more aggressive objective.
The selection process Brooks and his team use for selecting UK equities and bonds is broadly the same as their method for selecting funds. Asset allocation for each fund is determined through regular meetings and if they do not like a sector or region, they will not invest in it.
On the UK equity and bond side, the team will go for their best stock ideas, taking into account factors such as valuation, dividends, cashflow, whether the company can withstand changing market conditions and how difficult it would be for a competitor to enter that market. On the overseas and alternative investments side, the team will look at how long the fund manager has been in place, assess the underlying holdings and look at the weightings in each fund.
The Cornelian funds are a hybrid of a conventional fund and a fund of funds, which is now possible under Ucits III. Although mixed asset classes in a single fund may have diversification benefits for retail investors, this is a new concept and IFAs may prefer to wait until there is a track record before recommending these funds to clients.