DWS Investments has designed an Oeic fund of funds that invests only in DWS funds.
The DWS managed distribution fund will initially invest 50 per cent in equities and 50 per cent in bonds. However, it has the flexibility to invest between 40 per cent and 60 per cent in each asset class as market conditions change.
Jonathan Arthur, who currently runs the DWS managed portfolio fund, will manage the new fund. Although his existing fund is also a fund of funds, it focuses mainly on growth whereas the new fund will prioritise income.
Arthur's joined DWS when it was known as Deutsche Asset Management in 1996 after gaining 12 years' experience at Charterhouse, Tilney and BWD Rensburg. He specialises in asset allocation and is expected to hold the group's UK equity plus, corporate bond plus, UK equity income and sterling bond funds in the new fund.
DWS says the diversification between equities and bonds within the fund is a way of reducing risk. Investing exclusively in its own funds means the fund manager is more likely to have all the information he needs at his fingertips, making analysis and asset allocation easier.
However, this fund has its limitations compared with multi-manager funds of funds from companies such as Credit Suisse Asset Management, which have the whole market to choose from. Investors' money will be concentrated within the DWS group and will lack exposure to the strengths and different views of other investment houses, so diversification is compromised.
According to Standard & Poor's the DWS managed portfolio fund is ranked 40 out of 75 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to September 15, 2003.