Aim: Growth and income by investing in UK companies using a thematic approach
Minimum investment: Lump sum £1,000, monthly £100
Investment split: 24% corporate restructuring, 22% security of supply, 20% the strong get stronger, 17% intellectual property & excellence, 17% pricing power
Isa link: Yes
Charges: Initial 5%, annual 1.5% A shares, annual 1.35% X shares, performance fee 15%
Commission: Initial 3%, renewal 0.5%
Tel: 020 7038 7002
The Sarasin EquiSar UK thematic opportunities is one of two funds recently established by Sarasin & Partners that take a thematic investment approach to UK equities. It aims for a total return that outperforms its benchmark, the FTSE All Share index, by 3 per cent a year net of fees.
The fund invests in UK equities that are expected to benefit from the long-term themes that Sarasin has identified as drivers for growth. Fund managers Rohini Rathour and Jennifer Ramsey will look at five investment themes.
Corporate restructuring refers to firms that are restructuring to increase their potential profits. Intellectual property & excellence focuses on firms that can protect their intellectual property. Pricing power refers to companies who have some control over the prices they charge due to their strong market positions. Security of supply identifies companies that should benefit from price rises in natural resources and other necessities, while the strong get stronger focuses on financial strength.
Discussing Sarasin’s track record in thematic investing, Hargreaves Lansdown senior analyst Meera Patel says: “Sarasin has been investing on a thematic basis across various funds for over 20 years, so it has an established investment approach which has served it well over the long term. This approach sets them apart from traditional equity fund managers.”
Patel points out that Sarasin believes geography is irrelevant today and one way to invest is on a thematic basis. She says: “This fund looks to profit from themes such as corporate restructuring, pricing power, and companies with financial strength that are survivors from the credit crunch.”
Looking at how the fund could be useful for IFAs and their clients, Patel says: “The fund has a concentrated portfolio of 40 to 50 companies and I like this concentration as it allows the manager to focus on her very highest conviction ideas.”
Patel adds that the fund is able to use the wider investment powers of Ucits III, such as shorting. She says: “The fund is not an absolute return fund, but the greater flexibility should help overall returns in volatile or falling markets. This does however increase risk, so this should be taken into consideration when investing.”
Considering the potential drawbacks of the fund Patel says: “I feel there are too many UK funds in the IMA UK All Companies sector and we do not really need another one. However, in fairness to Sarasin, this is different to traditional equity funds.
Patel also says there is not a huge appetite for UK funds at the moment because the UK economy is in such a fragile state. She believes that despite this fund’s focus on UK companies in a global context, it may not attract huge amounts of money until confidence in the UK improves.
Weighing up the charges, Patel says: “The fund has an annual charge of 1.5 per cent plus a performance fee of 15 per cengt of any positive outperformance of the FTSE All Share Index. On the whole, we do not like performance fees as we can argue any active manager should be able to deliver a positive return.”
Identifying the main competition that Sarasin could face, Patel suggests Newton. “Newton manages money on a thematic basis and the Newton UK Opportunities would be the closest competition to this fund,” she says.
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average