Type: Unit trust
Aim: Growth by investing in a concentrated portfolio of UK equities
Minimum investment: Lump sum £500, monthly £25
Investment split: 100% in UK equities
Isa link: Yes
Pep transfers: Yes
Charges: Initial 5.25%, annual 1.5%
Special offer: Initial charge reduced to 3.25%
Offer period: Until September 30, 2006
Commission: Initial 3%, renewal 0.5%
Tel: 0845 609 0900
This unit trust combines the stockpicking skills of four Rensburg UK fund managers –Stuart Sharp, Colin Morton, Mark Hall and Paul Spencer. Sharp will pick 20 small caps; Morton will choose 10 blue-chip stocks; Hall will contribute 10 unrestricted stocks; while Spencer will manage 10 mid-caps.
Hargreaves Lansdown senior analyst Meera Patel thinks this is a great concept, combining the best ideas of four superb managers at Rensburg.
“Each of the managers come highly rated and I believe this fund offers investors exposure to some excellent talent all under one roof,” she says.
While each of the managers have individually built up a good track record, Patel points out that they also work as a team and discuss stock ideas. “This fund is therefore split equally between each manager and it harnesses all their best ideas with the aim to outperform through a concentrated portfolio of up to 50 stocks,” she says.
Each of the managers can invest in up to 10 stocks except for Stuart Sharp who manages the small cap portion of the portfolio and has the ability to invest up to 20 stocks. “As small caps can be higher risk, this diversification is perfectly sensible in my view,” says Patel.
One of the other attractions of this fund, according to Patel, is that there are no restrictions at the benchmark, stock or sector level. “It is flexible in that each of the managers can back their stock ideas to the full and the fund is not compelled to own a stock simply because it makes up a large proportion of the index. I believe this offers potential for superior performance,” she says.
She also mentions that the Total Expense Ratio is expected to be 1.69 per cent at launch, which she believes is quite competitive.
Turning her attention to the less appealing features of the fund Patel says: “There is very little I don’t like about this product. However, the fund would be structurally weakened if one of the managers left. This is however, a tight knit team who have plenty to offer and I would be surprised if any of these individuals left.”
Another word of caution from Patel is that this is a more specialist fund than a core blue chip portfolio. “It would therefore sit well as a satellite holding once an investors core funds are firmly in place. A long term horizon is therefore essential when investing in this fund as there may be times when the fund may suffer from market volatility or it takes a while for some of the stocks in the portfolio to pay off,” she says.
Looking ahead to the main competition the fund is likely to face Patel says: “Skandia is looking to launch a similar proposition later this year and that will provide like for like competition under a similar concept. However, their TER is likely to be at least 1 per cent higher.”
Patel also thinks many of the more aggressive UK funds with a mid and small cap bias, such as Invesco Perpetual UK Aggressive, Standard UK Opportunities and Resolution/Cartesian UK Opportunities will provide similar competition.
Patel concludes: “This is a great concept with some excellent managers at the helm. I expect to see more funds like this being launched.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average