Type: Oeic fund of funds
Aim: Growth by investing in a portfolio of investment funds, investment trusts, exchange traded funds, structured products, cash and other assets
Minimum investment: Lump sum £5,000, monthly £100
Investment split: 24% global equity, 24% absolute return, 15% UK equity, 15% commodities, 10% UK fixed interest, 10% property, 2% cash
Charges: Initial 5.25%, annual 1.45%
Commission: Initial 3%, renewal 0.5%
Tel: 01202 890895
The Way MA cautious fund, managed by John Husselbee of North Investment Partners, is a fund of funds portfolio aiming to generate the maximum return possible within a cautious risk profile.
Arch Financial Planning managing director Arthur Childs says: “The Way Group is quite unusual. It outsources its investment management and this probably makes it unique for a unit trust manager. It has an excellent understanding of the needs of IFAs, as it has grown out of one and it is years ahead of other boutique investment houses in realising that IFAs don’t just want good performing funds, but the tools to use them in the most tax efficient way,” he says.
Way differs from other fund management firms as it designs its portfolios to produce a zero, or close to zero, yield. “This makes its portfolios very tax efficient for higher rate taxpayers and is an essential ingredient in their trust-based IHT mitigation strategies,” says Childs.
Childs feels that the new MA cautious portfolio looks like a really good strategic decision. “With the greatest respect to Way, the only thing it lacks is street credibility among the general adviser community. This new appointment could have the same effect as Aldershot football club signing Sir Alex Ferguson as their manager.”
Childs regards Husselbee is one of the most experienced multi managers in the UK, having had great success in building up funds under management for Rothschilds and then Henderson before setting up North.
“Husslebee has a very different style to IMS, the bigger, conventional investment house to which Way has been outsourcing. He is a strong conviction manager who is not afraid to take advantage of changes in short-term market conditions to add additional value to his portfolios.
“The City Financial multi-manager income portfolio that he manages is first in the cautious managed sector over three years, returning 40.57 per cent up to May 20, 2008, according to Morningstar,” says Childs.
He points out that Husselbee will make full use of asset classes such as commodities, hedge funds and private capital. “This will not be merely a selection of unit trust funds or Oeics, as many of the earlier multi-manager funds were,” he says.
Childs regards the charges as typical but expects to see a total expense ratio of at least 1 per cent more than the quoted annual management charge. He thinks the commission is standard, but would not want to see a higher rate.
Turning to the potential drawbacks of the fund Childs says: “There is little to dislike about an experienced and successful multi-manager with a multi-asset portfolio, and an innovative investment manager with a good understanding of the needs of IFAs.
“In the past, Way has not done well in comparisons of multi manager TERs. It will be interesting to see if Husslebee’s use of ETFs, for example, will help the TER to be more in line in this case.”
Childs expects the main competition to come from Cazenove multi-manager diversity and Miton Arcturus Fund, with Schroder multi-manager cautious managed and CF iimia income fund as worthy contenders.
Childs concludes: “It will take me a while to get used to a fund which holds 15 per cent in commodities and 45 per cent in emerging markets and Asia as being suitable for my cautious clients.
“Having said that, I can see this fund being used as part of a multi-manager core for my cautious to moderate clients, alongside more obviously lower risk multi manager offerings.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Good