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Britannic Asset Management has added the global financial services fund to its stable of sector funds. The panel compare it with two existing global financial funds which aim for capital growth – Hill Samuel&#39s financial trust fund and Fram-lington&#39s financial fund.

Discussing the market suitability of the Britannic fund compared with the Hill Samuel and Framlington funds, Hall says: “The Britannic fund will compare well with the other two funds where investors perceive that the financial sector should show good performance over the medium and longer term.”

Rawnsley says: “The launch of Britannic&#39s global financial services fund follows a sector-specific trend set by a number of other fund managers over the last couple of years. Britannic&#39s overall investment performance is reasonable. It is not recognised as a sector specialist in the same way that Framlington and, to a lesser extent, Hill Samuel are.”

Anglesea says: “The Britannic fund is marketed as one of four global sector funds. Hill Samuel and Framlington&#39s funds are marketed as single specialist funds within a broad range of funds.”

Longbon says: “The Britannic fund follows an investing trend towards thematic funds away from geographical funds. Whether the investing public are ready for such funds is a different question. They are perceived to be more risky, which is not necessarily the case.” He says he does not see any difference between the market suitability of the funds.

Considering the investment split of the Britannic fund compared with the Hill Samuel and Framlington funds, Anglesea says: “Britannic&#39s fund invests internationally in companies involved in the financial services sector. This is very similar to Framlington, whereas Hill Samuel will also invest in property companies and inv-estment trusts.”

Longbon says: ” It is important to view the investment split in two ways – by sector and geography. The funds are very different and the Britannic fund follows a non-traditional mix compared to the other funds.”

Hall says: “The Britannic fund manager is taking a similar course to the Framlington fund, with North America and Europe excluding the UK being the main geographical sectors. In each case, they represent around 70 per cent of the fund. The Hill Samuel trust invests predominantly in the UK, representing 70 per cent of the fund value. The remainder is split equally between the US and Europe.”

Rawnsley says the Britannic fund has a higher weighting in North America than the other two funds. He points out that the Hill Samuel fund invests more in the UK and Europe compared with the other funds.

Comparing the investment philosophy of the Britannic fund compared with the Framlington and Hill Samuel funds, Rawnsley says: “The Britannic and Framlington funds are truly global funds seeking opportunities in financial companies worldwide. The Hill Samuel fund has far less exposure to international markets. It concentrates on the UK financial sector with some European exposure. The Britannic fund has a blue-chip bias concentrating on larger stocks in each geographical sector.”

Hall says: “All three funds seek capital growth by investing in the financial services sector. Britannic and Framlington are more global, with a large part invested overseas. Hill Samuel is predominantly inv-ested in the UK, with only a small proportion overseas and it is exposed to currency risk.”

He says the Britannia and Hill Samuel portfolios consist of 40 to 60 stocks, whereas Framlington has more than 100 holdings.

Longbon believes the inv-estment philosophy of the Britannic fund is disciplined but feels the Framlington fund is sharper. He also thinks the Hill Samuel fund is underweight in banks.

Moving on to the useful features and strong points of the Britannic fund compared with the Hill Samuel and Framlington funds, Anglesea says: “The fact that Britannic&#39s fund is newly launched and consequently very small should enable the fund managers to adopt a more active approach in the short term. I would expect it to outperform the other two funds over the next year or two.”

Rawnsley says: “The main advantage of the Britannic fund is that it is being marketed as one of four sector funds. It is therefore possible to spread investors&#39 capital across the four sectors to diversify risk. Framlington is recognised as a sector specialist, with funds such as health and net net. Hill Samuel has a fairly broad range of funds but they are general funds rather than sector specific.”

Longbon says: “The Britannic fund is part of a family of products that will be useful as portfolio-building tools.”

Discussing the drawbacks of the three funds, the panel are in agreement. Longbon says: “The Britannic fund has no evident track record.”

Hall says: “As the Britannic fund is new, there is no past performance to judge its success or otherwise. The other funds have a long track record for promotional purposes.”

Anglesea says: “The lack of past performance makes it difficult to recommend Britannic&#39s fund to clients looking for a proven track record.”

Rawsley says: “The main drawback of the Britannic fund is its lack of a track record in managing sector-specific funds. Both Framlington and Hill Samuel have a good reputation in the financial sector and their funds have performed well, doubling in value over the past five years.”

Assessing the reputation of the three companies, Longbon says: “Britannic is respected in the IFA market. Framlington is a first-class niche manager with long-serving fund managers who are highly respected in the City. Hill Samuel is a cautious investor&#39s dream.”

Rawnsley thinks Britannic has a reasonable reputation in the IFA market and that Framlington&#39s financial and health funds have an excellent reputation. However, he feels that Hill Samuel&#39s reputation among IFAs has diminished.

Hall says: “Britannic is not a leading brand name in the IFA market although it does have a reasonably good history in terms of fund performance. Framlington is a well recognised, dedicated investment house known for its specialist funds. It has a good reputation for performance over the medium and longer term.”

Rawnsley says Hill Samuel has a fairly staid image and that there is some confusion about where it fits into the Lloyds TSB grouping.

Anglesea says: “Britannic is one of the fastest-growing fund management companies in the UK. It is spending a lot of money on increasing public awareness. Framlington and Hill Samuel are perceived as good, solid investment stalwarts.”

Comparing Britannic&#39s past performance to that of Framlington and Hill Samuel, Hall says: “Britannic has a reasonably good reputation for performance of funds All three companies have some goodperforming funds.”

Rawnsley says: “Britannic&#39s performance is consistent across its range of funds, if uninspiring, in the UK sector. Its UK general fund performance has been fairly disappointing relative to the UK funds managed by Framlington and Hill Samuel. Britannic&#39s American growth fund has been its best-performing fund over the past five years but even this has been overshadowed by Framlington&#39s American growth fund, which is regarded as one of the market leaders. Framlington has the experience and performance already under its belt.”

Contrasting the charges of the three funds, Hall says: “The Britannic fund has a higher initial charge of 5.25 per cent as opposed to 5 per cent for the Framlington and 4 per cent for the Hill Samuel fund. In each case, the annual management charge is 1.5 per cent.” He thinks all the charges are within an acceptable range.

Anglesea thinks the char-ges on all three funds are very similar.” Longbon says he would have expected Britannic to offer a discount. Rawnsley thinks Britannic&#39s charges are fairly standard but says he would have expected the initial charge to be 1-2 per cent lower within the Isa.

Turning to commission, Hall says: “The Britannic fund has a slight edge on the commission, paying 3 per cent initial and 0.5 per cent renewal on unit trust and Isa investments. Framlington pays 3 per cent initial and 0.5 per cent renewal on Isas only. Hill Samuel pay 3 per cent initial commission with no renewal.”

Anglesea, Rawnsley and Longbon think the similar commission arrangement on all three funds is standard.

Looking at the product literature for the funds, Hall says: “The Britannic literature is quite eye-catching and is written in an informative style.”

Rawnsley says: “The product literature from Britannic is excellent.” Longbon says: “The Britannic literature is aimed at the IFA and public. It is good, clear and concise. The Hill Samuel literature is dowdy and old-fashioned. The Framlington literature is good.”

Anglesea says: “There was very little literature supplied for Hill Samuel and Framlington. The Britannic literature comes in a large folder which does not fit into any of the envelopes we have in stock. There are an enormous number of booklets, leaflets and forms, which are offputting.”

Britannic Asset Management


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