ISIS Friends Ivory & Sime – ISIS Ecotec Fund
Aim: Growth by investing in environmental technology companies
Minimum investment: Lump sum £1,000, monthly £50
Investment split: 100% environmental technology companies
Isa link: Yes
Pep transfers: Yes
Charges: Initial 4.75%, annual 1.5%
Commission: Initial 3%, renewal 0.5%
Tel: 08457 992299
Broker Panel: –
Michael Both - Proprietor, Michael Philips
Steve Barton - Proprietor, Steven Barton Financial Services
Keith French - Managing director, French & Associates
Miles Moseley - Managing director, MM Financial Management
Paul Sully - Associate, Pinwood Investments
Broker Ratings: –
Suitability to market: 7.0
Investment strategy: 7.6
Past performance: 5.6
Company's reputation: 6.8
Product literature: 6.8
ISIS Friends Ivory and Sime has introduced its ISIS Ecotec fund, an Oeic,which invests in environmental technology companies.
Looking at how the fund fits into the market, Both says: "The share class is deliberately aiming for a very narrow market niche, namely global investment in environmental technology and service companies. It doesn't have many rivals with the exact same brief."
Barton feels it is a fairly unique market placement combining the green effect with modern technology. He goes on to say: "While ethical and green funds have been around for some years, none have targeted new eco-technology and with the world powers (other than US) trying to meet targets sooner rather than later, this fund should benefit."
French says: "This fund offers something different to talk about. It is a specialist growth fund, environmentally friendly but not screened, so no impact on performance. This could be the next big theme."
Sully says: "I can see that this fund would certainly be useful within some client portfolios as a small portion of the total invested. There are some very valid reasons why this might be a strong performer, however there are strong links with the technology sector and we all know the story there."
Identifying the type of client the fund is suitable for, Moseley says: "It is suitable for more speculative investors looking for ethical or environmental type funds."
Sully thinks it is most suited to the experienced investor who is able to accept the higher risk associated with this sector.
French says: "Suitable for most, although it should only form a small percentage of a portfolio as it is very speculative. This fund is investing in the future of our environment - something that is topical at the moment, the difficulty will be persuading clients to invest now."
Both says: "While many green funds are really something of a cop-out, stretching the definition to include heavy weightings in bank and oil companies, this fund claims to be aiming for new technologies which should benefit from the political will to improve the environment."
Barton thinks it will be suitable for green clients who still want to invest in technology.
Turning to the marketing opportunities the fund will provide, Barton points to the ever-increasing ethical market across all age groups.
Sully feels the product has been introduced at the wrong time. He says: "There is still a lot of unease within the market place and where I can see that the timing will probably benefit the longer term investor, as far as marketing the product is concerned we still need to see investor confidence increase."
Both says: "While emotionally the fund has everything a politically correct investor could want, as an IFA who is not keen on testing the generosity of my professional indemnity insurer, I would need to make very sure that any socially responsible would-be investor is under no illusions as to just how volatile this fund could be."
French says: "This fund provides something new to talk about that is less market sensitive. This is not an investment area that can be judged on past performance history, it doesn't come with any baggage."
Analysing the main useful features and strong points of the product,
French says: "Many countries are committing vast sums to invest in the future of our environment so investment funds that ride of this commitment should produce good growth. Although a specialist area the expertise is there.
"This is an open ended fund where as others that have entered this market have been investment trusts. There is a facility to take regular withdrawals if an income is required and there is an Isa and Pep transfer facility available."
Both points out that the fund has a clear focus and the experience of Friends Provident, plus the Oeic structure, which should help keep costs down a little.
Barton lists the history of Friends Provident being in the green market, low minimum contributions and the availability for Pep.
Sully says: "The product has flexible investment options and is well placed to take advantage of the growing green lobby and governments commitment to finding solutions to the world energy problems."
Discussing the investment strategy, Moseley thinks it is consistent with the funds objectives but only very few companies fit into the required criteria, making the fund a high risk.
Sully is pleased to see that they target only companies whose growth potential is based on fact and that the fund offers genuine, sustainable growth, however he would like further information on how the fund managers pick these companies.
Turning to the funds disadvantages, French points to its specialist nature. He says: "It is not a fund that is brought, it will have to be sold. Most clients will not of heard of the underlying companies."
Moseley highlights the limited number of companies to invest in, as there are not many hi-tech environmental companies to choose from.
Both says: "Its has a very narrow focus and the lead managers, whose experience may not be good enough, considering that 40 per cent of the fund will be in the US and neither is flagged as having worked there."
Sully says: "With the intervention of the governments that are pushing these investments forward you could see some element of government control
or even profit capping?"
Barton lists its limited range and scope of investment limits it to niche market.
Looking at Friends Ivory & Sime's reputation, Both says: "As an ethical group, extremely good, especially in the socially responsible investment sector where this is aimed. As an investment for making clients richer, I'm not sure."
Barton says: "Friends, well established history in ethical market, Ivory & Sime, seen as specialist investment house, combination of both can only be better for portfolio management."
French says: "Not a household name, a specialist player with a good small cap and VCT record."
Moseley says: "Its investment management seems to be limited to two unit trusts, one above and one below average over three years. The company also runs four investment trusts. Seems above average."
The panel agree that Friends Ivory & Sime's investment past performance record is reasonable.
Discussing the funds main competition, Sully thinks environmentally friendly green funds and some specific technology funds.
French feels that there may be some competition from closed ended funds, such as Merrill Lynchs' environmental tech.
Both says: "AMP has a couple of global green funds, neither of which should be a worry. Green investors would probably also consider funds with a medical bias, which are more established."
French and Sully feel that the charges are fair and reasonable for a specialist fund. Both thinks the charges are above par for the investment company with variable capital course.
Commenting on the commission payable, the panel agree that it is fair and reasonable. Although French feels the type of client that would get involved with this fund is likely to be fee paying.
Analysing the product literature, Sully says: "Very good. Gives you a feel for the product almost immediately and precisely outlines the arguments for investment in this sector. Thanks for mentioning the independent financial adviser on the back page."
Both feels that it is fairly uninformative. Moseley says: "All right if a bit dull." French and Barton think the literature is clear and easy to read.
Summing up Moseley says: "An interesting product for the environmentally aware who put conscience before returns."