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Dual track solution for Royal Skandia


UK Equity Fund

Type: Offshore unit-linked fund.

Aim: Growth by investing in UK actively and passively managed funds.

Minimum investment: £15,000 lump sum, £100 a month.

Place of registration: Isle of Man.

Investment split: 100 per cent UK.

Yield: Nil.

Charges: Annual one per cent.

Commission: Subject to negotiation.

Tel: 01624 611611.

David Cuthbert, corporate sales manager, Russell Plaice & Partners

Rob Jackson, principal, Kensington’s Investment Management (Newcastle)

David Flowers, director, RBC (UK).

Market suitability 7.0

Company’s reputation 8.3

Flexibility 8.6

Charges 5.0

Commission 6.0

Product literature 7.5

Isle of Man-based Royal Skandia has introduced the UK equity fund, an offshore unit-linked fund that aims for growth by investing in UK actively and passively managed funds. The product will have two portfolios, one actively managed by Mercury Asset Management, and the other investing in the FTSE allshare index fund, which is managed by Gartmore Investment Management.

Looking at how well the fund fits into the market, Cuthbert says: "Tracker funds are becoming more popular, and this fund makes available a number of passive tracker and actively managed assets to give clients the best of both worlds. By restricting the fund to UK equities, the risk level is not too high.

Jackson says: "This product will slot into the market very well. The product is flexible and has some good fund managers involved, such as Gartmore and Mercury."

Flowers says: "This is a useful addition to Royal Skandia’s multi-manager range of funds. However it must be remembered that this is a fairly narrow and sophisticated market."

Examining what type of client the fund is suitable for, Jackson says: "This is for the more sophisticated client, who wants to invest in the UK equity market but who does not have the time to spend looking for the best managers in the sector and who would also like to use offshore funds for tax-efficiency. Perhaps it can also be used for a non-UK resident at this point, with a view to returning later, or to set up a trust fund for minors."

Flowers says: "The product would be best suited for a client who is already attracted to Royal Skandia’s investment product range. Also for those who have large portfolios but who do not want to actively manage their investments."

Cuthbert adds: "This is for clients who wish to be involved in equity investment with the potential for good returns without taking a high risk."

Moving on to the types of marketing opportunities that the product will provide, the panel are split, with Flowers unable to suggest any apart from making it available to existing Royal Skandia investors.

However Cuthbert says: "Offshore investment does tend to put some clients off, but the Royal Skandia product should help to overcome some resistance, as the investment will be in UK companies."

Jackson says: "I can see two opportunities here. Firstly, it could be recommended for long term investment for trusts to grandchildren and secondly, it can be used for investments for growth using gross roll-up for higher rate taxpayers."

Identifying the product’s strong points, Cuthbert says: "The biggest plus is the fact that it combines passive and active management, along with the fact that there are some good fund managers attached to it."

Flowers says: "This product fills a gap for specifically UK orientated equity investors who are seeking a multi-manager type of investment philosophy."


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