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Growing a hybrid

Chris Salih analyses satellite holding Investec balanced managed fund.

The launch of Investec’s balanced managed fund earlier this year signalled the company’s desire to target the defined-contribution market and completed its range of managed funds.

Philip Saunders, who manages the fund in tandem with Max King, says the fund has got off to a steady start having accrued 15m since January. He says: “We did not want to shoot the lights out as we have been cautious in the short term, thanks to markets going up consistently since June 2006, barring a small blip in February.”

Saunders is positive on the equity market and has bolstered his position since the launch while he continues to be less optimistic on bonds.

He says: “Universally, bonds have been viewed with pessimism. Nonetheless, there is still a strong diversification argument for holding them.”

An interesting component of Saunders’ fund is the fact that he treats currencies as a separate asset class that he can manage using overlays, with larger term liabilities determined globally.

Saunders says the benefits of offering a hybrid fund of this ilk are widespread, particularly as a result of the flexibility of the mandate.

“We have such a wide freedom in that we do not really have a set benchmark, as well as offering access to internal and external fund managers. Then there is the increased likelihood of meeting investor returns by combining both the alpha and beta returns.”

Two-thirds of the underlying portfolio consists of in-house portfolios. At an asset allocation level, 69.1 per cent of the fund is in equities, 26.3 per cent bonds, 4.5 per cent property and 6.4 per cent cash.

Saunders says advisers who wait for a fund to obtain a track record should look to the offshore vehicle as an indication to for how the fund may perform.

He says: “There are two contrarian vehicles that investors should factor in before making a decision on this fund. First, there is a global version that we run offshore as well as managed fund that I have been running for over four and-a-half-years. Both operate in a distinctly similar style and have been largely first quartile since launch.”

What Brokers think of the fund

BestInvest head of communications Justin Modray says:

“We are yet to rate the fund as it is so new to the market but Max King and Philip Saunders are two managers that we like. It is a very strong offering in terms of its exposure to the market, with the only down side being the large exposure to fettered vehicles within the approach.”

Hargreaves Lansdown senior adviser Ben Yearsley says:

“It is a fund that has yet to pop on to the radar. Investec has a number of strong offerings within the range and maybe the group is waiting a bit longer to proactively talk about this fund as it has a wide exposure to a number of asset classes.”


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