CREDIT SUISSE ASSET MANAGEMENT
CREDIT SUISSE MULTI MANAGER CONSTELLATION PORTFOLIO
Type: Unit trust fund of funds
Aim: Growth by investing in funds of funds.
Minimum investment: Lump sum £1,000, monthly £100.
Investment split: 100 per cent fund of funds.
Isa link: Yes.
Pep transfers: Yes.
Charges: Initial 4 per cent, annual 1.5 per cent.
Commission: Initial 3 per cent, renewal 0.5 per cent.
Tel: 020 7426 2626.
Suitability to market 7.3
Investment strategy 7.6
Past performance 7.0
Company's reputation 7.0
Product literature 6.7
The panel: Nick Upton, Consultant, Ian Cooke & Partners,
Barry Laymond, Senior practitioner, Barry Laymond Financial Services,
Anna Bowes, Investment services manager, Chase de Vere Investments.
Credit Suisse Asset Management's multi-manager constellation portfolio is a unit trust fund of funds that aims for growth by investing in funds of funds. It is managed by former Rothschild Asset Management trio Gary Potter, Robert Burdett and Kelly Prior.
Assessing the fund's suitability to the market, Upton says: “It fits very snugly indeed. To my knowledge this is the only multi-manager focussing on smaller boutique operations as they are known in investment talk.” Bowes says: “As a ready made diversified portfolio, it takes the onus away from the client to ensure that they have a spread of assets.” Laymond says: “It is yet another new entrant seeking a share of what currently is a reducing market due to world events and the horrific attack in America on September 11.”
Identifying the type of client the fund could attract, Bowes says: “It is especially useful for high-net-worth clients that have large lump sums they want to invest diversely, without the responsibility and paperwork of buying and selling collective investments.” Laymond says: “Those who are happy to gamble and who can afford to lose money invested. This is not for the faint-hearted.” Upton says: “According to Credit Suisse, this product suits the client looking for aggressive growth and given the bias towards specialist funds of a smaller size you are naturally working at above-average attitude to risk.”
Discussing the potential marketing opportunities for the fund, Laymond says: “There are none that do not exist already with other fund managers.” Upton says: “A specialist investment adviser with a few clients looking for something a little out of the ordinary will no doubt make good use of this product. Other advisers may have clients for this but I don't think this product is for everyone.”
Bowes says: “It has very experienced fund managers. While this is a new area for Credit Suisse, it can use Potter and Burdett's past history and performance. It has the ability to target investors who desire better performance and are prepared to take a higher level of risk.”
Considering the strong points on the fund, Upton says: “Credit Suisse is soon to have a focused analytical formula to select the fund groups that will make up the constellation fund. On a personal note, I find this product far more exciting than the endless tracker funds and corporate bond funds that have been flooding the market in recent years.”
Bowes says: “It has a good spread of investment, both globally and sectorally, It offers exposure to a variety of fund management expertise, lower risk through diversification, a double layer of active management and access to the expertise of Potter and Burdett.” Laymond sees it as a ready-made portfolio for those seeking an alternative to existing multi-manager type contracts.
Looking at the investment strategy, Bowes says: “It has a good strategy as it is not constrained to any specific anchor, thus providing the opportunity to participate in any potential growth. Although the strategy is generally quite high-risk, the active management and diversification reduces this risk slightly.”
Laymond says: “In theory, it is excellent, in practice it may have a rough ride.” Upton says: “I like it. I might have a little go myself. Many investors, myself included, are looking for an investment that can perform. Let's just hope this one does.”
Pointing out the disadvantages of the fund, Upton says: “It includes smaller operations and start-ups so I would expect a fair bit of volatility. In addition, there are those smaller investors who like to make every investment decision themselves.” Bowes highlights the possibility of double charging and a lack of control over external funds. She also mentions the possibility of high exposure to specific funds, for example, 10 per cent in Close Finsbury Japan equity.Laymond says: “It may well suffer loss as with funds exposed to technology from March 2000 to date because of its bias towards higher-risk funds on the up.”
Assessing the company's reputation, Upton says: “I didn't know very much about this company, never having the pleasure of a visit from one of its representatives for a light luncheon. The name sounds very respectable.” Bowes says: “It has a very good reputation in the UK & US market. However, it is the management expertise of Potter & Burdett that gives the confidence to recommend it.” Laymond says: “While known to some advisers, Credit Suisse Asset Management is not a household name. So even though the reputation is good, it is not on all practitioners' lists of must use companies.”
Looking at the company's past performance, Bowes says: “Its UK and US funds have done particularly well, especially the UK income, monthly income and transatlantic funds.” Upton says: “It is mixed. It seems to have a few performers in the UK growth, UK income and monthly income funds. Other funds seem to be launched fairly recently.” Laymond emphasises that it relies on the collective skills of external fund managers.”
Identifying the likely competitors, Laymond says: “Other collective investments offshore from Canada Life, Royal Skandia and Sun Life, plus similar UK based funds, particularly from Skandia.” Upton goes for other multi-fund providers but adds that they may not offer as many smaller investment groups. Bowes cites Rothschild international private portfolio service and Lazard international.
The panel consider the charges. Bowes thinks they are reasonable as long as investors understand the double charging structure due to two levels of active management. Laymond says: “It would have been a unique opportunity to launch this fund and go for lower charges using the bulk buying power of Credit Suisse Asset Management to drive down the charges.” Upton says: “As I've said before I believe you get what you pay for and here you are paying for investment expertise and hopefully results.”
Upton and Laymond see the commission as in line with the market, although Laymond is concerned that it mat not be enough to cover the time needed to explain the portfolio. Bowes says: “It is quite generous as many unit trusts do not pay renewal commission.”
Casting an eye over the product literature, Bowes thinks it is clear, nice to read. and that it lays out the portfolio well. Upton says: “Fine. It is easy to read with some fine, carefully chosen words from the directors. terms that are related to stars seem to be a trend, like this year's black.” Laymond says: “Much explanation is given on funds and importance of selecting a portfolio to achieve what you want in the key features. Why on earth was no risk rating given to the fund in line with most other investment houses?”
Summing up, Laymond says: “It is a nice try but only time will tell if investors are going to run with this theme.”