Aim: Growth by investing in a portfolio of ETFs managed to an aggressive risk profile
Minimum investment: Lump sum £1,000 for retail share class, £50,000 for institutional share class
Investment split: 100% in risk assets including equities and property through ETFs
Isa link: Yes
Charges: Retail share class – Initial 3%, annual 0.9%, institutional share class – annual 0.4%
Commission: Retail share class – initial 3%, renewal 0.5%
This Oeic invests mainly in ETFs and tracker funds to provide capital growth.
Looking at the positive features of this fund Michael Philips proprietor Michael Both sees the fund as a low-cost option, which is interesting because it is risk-profiled.
“Evercore uses a dynamic asset allocation process to invest mainly in exchange traded funds. It will mirror the investment approach of its slightly older offshore PanDynamic model portfolios. They define risk appetite in terms of maximum tolerance of loss, which is measured in terms of sensitivity to historic volatility. In other words the target maximum loss that a fund could make and that an investor is willing to accept in any one year. Return benchmarks are linked to multiples of cash returns,” he says.
Turning to the potential drawbacks of the fund Both says: “We are told that the new fund is very similar to the snappily named PFS Evercore PanAsset PanDyamic platform-based model aggressive portfolio. In the 12 months to September 2010 it returned a very respectable 18.7 per cent. But given that its benchmark was three times sterling Libor – say in the region of 5 per cent, one has to wonder how investors or advisers are supposed to rate the results.
“Was the massive out-performance fantastic or worryingly over-risky? Probably neither because I suspect the choice of benchmark may have been inappropriate given the portfolio’s stated aims and typical weighting of 75 per cent equities and 25 per cent other assets.”
Both points out that the fund may invest at the investment manager’s discretion in assets such as transferable securities, money market instruments and depositary receipts but is avoiding derivatives except for hedging. “Investors must be wondering just what currently 40 per cent of their money is invested in. The answer according one of the information sheets would appear to be ETFs in some combination of property, private equity, hedge funds, commodities, timber, water, clean energy, global infrastructure and foreign exchange. We may applaud the fact that even these once esoteric classes are now available via ETFs but the reason why they should be compared to Libor eludes me.”
Both feels that making fair comparisons with other products is difficult as the fund has not yet been assigned a sector. However, he sees Ruffer equity & general and Barclays Wealth global markets 5 as potential competitors.
Summing up Both says: “For a company which seems to be targeting IFAs, with what at first sight should be a very interesting and attractive proposition, Evercore lets itself down by having a poorly designed website and limited literature.
“It uses that the fact that few managers consistently beat their index as the justification for using ETFs. But given the wide latitude of this fund and the totally unrelated benchmark such comments are fatuous.”
He adds that Evercore appears to be trying to make a decent return by picking sectors rather than shares and believes that ETFs are a relatively low cost, low risk way to go. “Quite how it accounts for risk in any practical sense within their model is not made clear from any of the literature which I have found on its website.”
Suitability to Market: Good
Investment Strategy: Good
Adviser remuneration: Good