Aim: Income and growth by investing in multi-manager fund of funds.
Minimum investment: £10,000.
Investment split: Dependent on choice of strategy – income, UK growth plus, income and growth, worldwide growth.
Income facility: Available.
Charges: Initial £10,000-£50,000 – 4 per cent, £50,001 and above – 3.5 per cent. Annual 1.5 per cent.
Commission: Initial 3 per cent, renewal 0.5 per cent.
Tel: 020 7426 2929.
Suitability to market 7.3
Investment strategy 7.2
Past performance 7.2
Company's reputation 7.3
Product literature 6.0
Credit Suisse has introduced the private portfolio service, a portfolio management service that allows access to four different investment strategies and up to 12 funds of funds.
Taking a look at how the service fits into the market, Laird says: “Funds of funds are currently vying with hedge funds for the title of trendy investment of 2001. Credit Suisses' recent resurgence and the high profile of the new fund managers, Richard Burdett, Kelly Prior and Gary Potter, who joined from Rothschild, should ensure that it gets off to a flying start.”
Spendlove says: “It fills the gap between holding separate collective funds and the self-select approach offered by companies such as Skandia and Sterling, this offering being a discretionary multi-manager approach.”
Bloom feels that it is generically a fund of funds investment service.
Moving on to the type of client that the product is suitable for, Spendlove says: “This is for virtually all types of investors with different investment strategies available to invest in and switch between at any time, although the lowest risk available would be low to medium' Not suitable therefore for low-risk investors. Both income and growth investors can be accommodated.”
Bloom says: “The product is for clients who do not have enough capital to utilise a fund manager's segregated fund management service and who do not have access to an adviser with investment expertise.”
Laird says: “It is suitable for most clients. Part of the appeal of funds of funds is the spreading of risk, so it will attract relatively unsophisticated investors. Experienced investors may also like it, as the structure enables any poor performers to be dropped without triggering a capital gains tax liability.”
Looking at the marketing opportunities that the product provides, Bloom says: “This is ideal for non-specialist advisers, such as accountants, solicitors and so on.”
Laird says: “It has quite a few marketing opportunities due to the wide appeal and the range of funds offered, as well as the profile of the managers.”
Spendlove says: “It offers limited marketing opportunities for ourselves. Some IFAs will market the product heavily on the basis of using expert discretionary management at a more than reasonable level of cost. We will continue to self-select specific portfolios to meet each client's aims, objectives and specific circumstances.”
Examining the strong points of the product, Laird says: “With so many funds to choose from, there should be at least one to suit most needs. Capital investments can be phased and income can be withdrawn, but the minimum is £1,000.”
Bloom says: “The main strong point is that it provides a service with is professionally monitored, actively managed and well presented.”
Spendlove points to a number of useful features. He says: “This has expert discretionary management, access to smaller investment boutique funds which are often not available to small private investors. It also has strategies to meet the needs of different investors with switches allowed between strategies to accommodate changing circumstances and has competitive charges.”
Moving on to the disadvantages of the fund, Bloom feels that it is expensive.
Spendlove says: “There is no specific mention of particular companies. The bias may be towards smaller companies in one area, substantially increasing the risk. Also it is not available as an Isa, which will reduce returns on high-yielding funds invested in fixed interest securities. Other drawbacks are the high minimum lump sum of £10,000 and the regular monthly sum of £1,000. Finally there is the lack of investment control for adviser and client, although some advisers will like this hands-off approach.”
Laird says: “The wide range of funds may lead to client indecision. Despite the hype, fund managers Burdett, Prior and Potter's track record at Rothschild was somewhat less than exemplary. The minimum investment levels are high, at £10,000 lump sum and £1,000 a month thereafter. The latter is virtually useless.”
The panel approves of the reputation of Credit Suisse. Spendlove says: “Credit Suisse has a very good reputation. It is well established, large and is financially strong, with a good range of its own fund offerings.”
Bloom thinks that it has a good reputation within the professional market. Laird is more lukewarm. He says: “Credit Suisse, at least amongst clients, is not particularly well-known, although the Swiss connection emphasises efficiency and timeliness within the industry. It has had, perhaps until now, a dull but worthy reputation.”
Moving on to the past performance record of Credit Suisse, Bloom says: “This is reasonably good – with this sort of approach it would presumably also rely on its institutional research.”
Spendlove says: “Credit Suisse has a number of top performers, including the income and North American funds. Most funds demonstrate reasonable performance, so overall I'd say that it has above average past performance.”
Laird says: “It has an excellent reputation in terms of both the UK income and the North American funds. Otherwise, however, it is poor.”
Assessing the charges, Spendlove says: “The charges are fair and reasonable. They are at the same level, broadly speaking, as most individual collective funds. Credit Suisse has obviously negotiated terms with the fund groups it has selected. Also a 0.5 per cent discount to a 3.5 per cent initial charge for £50,000 plus is useful.”
Bloom says: “The charges are fair and reasonable for funds of funds, which are expensive by their very nature.”
Laird says: “The initial charge of 4 per cent is reasonable enough, but the annual across the board management charge of 1.5 per cent looks very expensive for any cash or bond funds.”
The panel agrees that the commission charged for the product is also fair and reasonable.
Casting an eye over the product literature, Bloom thinks that this is good. The others however, are not so sure. Laird says: “The literature is undoubtedly comprehensive, but is very heavy and is not suitable for posting as part of a portfolio.”
Spendlove says: “It is a little bland, although it is reasonably user-friendly and informative. It does have a catchy marketing name though.”
Summing the product up, Laird says: “The portfolio service provides a substantial increase in the variety of products offered by Credit Suisse. I would have preferred to see the fund managers focus on two or three funds, rather than 12. I hope that the performance justifies the hype.”
Spendlove says: “Credit Suisse has got in early in a market that I would expect will provide numerous new launches over the next one to two years.”
Finally Bloom says: “Managing money is always very difficult for clients with £10,000-£100,000 as this is too small for segregated management and is also expensive for those with £70-80,000. This is a difficult problem for advisers, managers and clients alike.”
Godfrey Bloom, Investment director, TBO Corporate Benefits Consultants, Mark Spendlove, Associate director, Bowland Financial Management, Steve Laird, Senior partner, Laird Financial Planning.