HSBC ASSET MANAGEMENT
HSBC UK Freestyle Fund
Aim: Growth and income by investing in a concentrated portfolio of UK equities
Minimum investment: Lump sum 1,000, monthly 50
Investment split: 100% in UK equities
Isa link: Yes
Pep transfers: Yes
Charges: Initial 4%, annual 1.5%
Commission: Initial 3%, Isa renewal 0.5%
Tel: 0800 181890
The HSBC freestyle fund is an Oeic which aims for absolute returns. It invests in a concentrated portfolio of between 25 and 30 UK equities that are selected without reference to a benchmark index.
Chadney Bulgin partner Bruce Bulgin regards this as an innovative proposition in that the managers are free from the usual constraints of a benchmark index. He says: “The relatively small number of holdings, at between 25 and 30, means that the fund managers should have a good understanding of the companies in which they are investing.”
Bulgin thinks the charges are about average as is adviser remuneration. He also points out that it is assured that the fund will be available through fund supermarkets. “HSBC can boast of success with its UK growth & income Oeic which is highly rated by Forsyth-OBSR but adopts a more traditional approach than the freestyle fund,” he says.
Bulgin finds the literature comprehensive and easy to follow. However, considering the potential drawbacks of the fund he says: “The lack of benchmark constraints is a weakness as well as a strength. In many ways the freestyle fund is not dissimilar to focus funds, special situations and recovery funds available in the marketplace.”
According to Bulgin, it is useful to look at how a fund has performed in relation to the competition even through there is no benchmark. He adds: “There is also the risk that the fund will become a jack of all trades and a master of none.”
In Bulgins view, other focus funds, recovery funds, special situations funds and select opportunities funds will provide competition, as well as mainstream UK equity growth funds.
Bulgin concludes: “The basic concept looks attractive so that the fund manager is freed from having to concentrate on specific sectors. The limited number of holdings is also attractive.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average