Aim: Growth by investing globally in equities, bonds, property and commodities
Minimum investment: Lump sum £1,000, monthly £50
Investment split: 30% UK equities, 25% developed market equities, 20% UK bonds, 10% global bonds, 5% emerging market equities, 5% property, 5% commodities
Isa link: Yes
Pep transfers: Yes
Charges: A shares – initial 5%, annual 1%, N shares annual 0.5%
Commission: A shares – initial up to 5%, renewal 0.5%, N shares – none
Tel: 0800 995511
The balanced fund has a higher equity weighting than the defensive and cautious funds in the new Fidelity FundsNetwork multi-manager range and will include emerging markets, global bonds and commodities.
Flowers McEwan director David Flowers says: “ This is a welcome heavyweight addition to sensible investment for clients. It can be done in a way that is appropriate to their risk profile and manageable in the long term. It is excellent for IFAs because of Fidelity’s reputation and brand and is supported by their usual high quality literature.” He adds that being unfettered gives a more independent feel to the portfolios.
Considering the less attractive features of the fund, Flowers says: “The fund is described as part a manager of managers range, when it really a fund of funds. As such, the fund range is expensive on a commission basis. The reduction in yield is a terrifying 2.6 per cent for the lowest risk fund and nearly a very scary 3 per cent for the highest risk fund. That means that the least risky defensive fund is going to have to return something of the order of 8-9 per cent to exceed the returns from basic, no risk, cash deposits.”
Flowers can see no justification for selling that fund and taking 5 per cent commission up front. “It is almost as hard to justify the aggressive fund which would have to return well over 10 per cent to come anywhere near a reasonable long term return,” he says.
Flowers thinks the charges are a little more acceptable on a nil commission basis, but points out that the lowest reduction in yield is still 1.5 per cent. “The risk related portfolios are easy to understand and use although most of the portfolios have a higher equity weighting than we would allow for the definition of risk they use,” he says.
Scanning the market for potential competitors, Flowers says: “Most major investment houses with a retail arm provide a risk-related fund of funds option. However, our favourite alternative is the range of true manager of manager funds from MLC.”
Summing up, Flowers says: “If you are looking for risk profiled, unfettered, fund of funds solutions for clients and can justify the cost in the Fidelity range then this package is very good. It has excellent literature, which walks you through the process very well and leads you to a straightforward choice of fund and product.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Poor