Dresdner RCM British Portfolio Trust
Type: Investment trust.
Aim: Income and growth by investing in UK equities.
Minimum investment: £1,500.
Maximum investment: No maximum.
Investment split: 100 per cent in UK equities.
Types of share: Ordinary.
Isa link: Yes.
Pep transfers: Yes.
Redemption date: None.
Charges: Annual 1 per cent.
Commission: Initial up to 2 per cent.
Tel: 08457 127128.
Peter Cox, Principal, James Tate IFC, Luke Gibbon, Proprietor,
Independent Personal Financial Planning, David Wingar, Partner,
Courts Independent Financial Management.
(Average marks out of 10)
Investment philosophy 7.0
Past performance 6.0
Company's reputation 6.3
Product literature 6.0
Dresdner RCM has introduced its British portfolio trust an investment
trust aiming for growth by focussing on UK equities.
Commenting on how the trust fits into the market, Gibbon points out
that it will invest predominantly in the FTSE 100 and could form part of
a core portfolio. Cox says: “It is just like any of the other UK equity
funds on the market at the moment. UK equity income funds are a
good choice and the more there are the better, in the current market.
A new fund has opportunities to select good stocks at fair prices.”
Wingar says: “It's okay, but this is just another UK growth fund. I
cannot see that it is overly attractive other than being launched with
the market prices still low.”
Identifying the type of client for whom the trust is suitable, Wingar
thinks it is suitable for medium-risk equity clients. Gibbon says: “The
type of client who will invest in this would want a broad based UK
equity investment but is prepared to take a higher risk.” Cox agrees
with this and says: “A good knowledge of investment trusts would be
required. They would be happy to invest over the longer term, an
Assessing the marketing opportunities for the trust Gibbon says:
“This fund will be one of many broad based UK funds and as such
will not present any new marketing opportunities.” Wingar agrees
with this, but Cox says: “It could provide opportunities for investors
who like the potential benefit of a new fund to buy stocks at fair
Turning to the main useful features and strong points of the trust,
Wingar points to the fact that it is a new trust in a low-rising
marketplace. Gibbon says: “The trust is being introduced when equity
markets are low and have good potential to recover. Also, by gearing,
a client could obtain greater returns.” Cox says: “Launching at a time
when equities could be considered cheap, new money should
ensure that the fund is not burdened with stocks currently out of
Looking at the investment philosophy of the trust Gibbon says:
“Funds invested predominantly in the blue chip market tend to
consistently produce returns greater than inflation in the medium to
long term.” Cox says: “I cannot see anything new. However, I
personally think the timing is right, with good investment
Analysing the trust's disadvantages, Wingar thinks it has competition
from the largest investing sector – UK growth. Gibbon says: “The
gearing will work against the client in falling markets.” Cox says:
“Most UK growth trusts are currently trading at a discount to net asset
value. This trust will be purchased at asset value plus costs. If after
launch it follows similar funds, then I might expect it to trade at a
discount. This is very much a concern.”
When asked about Dresdner RCM's reputation, the panel members
have differing opinions. Wingar says: “A solid investment house.” Cox
says: “A year or 18 months ago it had a very good reputation as a
fund management group. It is now in the process of rebuilding the
teams and I hope this allows it to return to its leading ways.” Gibbon
thinks it is simply okay.
Commenting on Dresdner's investment past performance record,
again the panel disagree. Cox thinks that until about 18 months ago it
was very good, but since then it has been very poor. Wingar says:
“Above average.” Gibbon says: ” Dresdner is not a company I have
used in the past. Looking at its past performance, my initial view is
that it is average. However, I would want to carry out further research
before making any final judgement.”
When considering which trusts will provide the main competition, the
panel agree that it will be up against most other UK investment trusts
and unit trusts. Cox adds: “Established investment trusts trading at a
discount or a very small premium, such as Fidelity, Fleming and
The panel agree that the charges are fair and reasonable. Gibbon
says: “There is an annual charge of 1 per cent and I have been
informed by Dresdner that dealing costs will be 0.5 per cent plus £20
selling charge. Against peer funds, the costs are comparable, but in
the new stakeholder climate I think the costs of investment funds are
high and they will have to reduce their costs in general.”
Concerning the matter of whether the commission payable is fair
and reasonable, the panel agree that it is.
Commenting on the product literature, Wingar thinks it is concise and
Cox thinks it is nothing special from what he has seen. Gibbon says:
“In general the literature is reasonable. It was not clear, however, that
the loan notes issued by Lafarge Minerals (former shareholders of
Blue Circle Industries) and Shopgoal (former shareholders of
Fairbar, which was de-merged from Whitbread) were to be
exchanged immediately for ordinary shares, in order to bolster the
trust at launch. Also, no mention seems to be made of the exit costs
and these should be made clear.”