Type: Offshore multi-manager Oeic
Aim: Growth by investing in UK equities and equity-related securities through a manager of managers approach
Minimum investment: Lump sum £1,000
Investment split: 26.8% industrials, 18.8% basic materials, 12.7% oil and gas, 9.6% financials, 7.4% consumer goods, 7.4% telecoms, 6.5% consumer services, 5.6% healthcare, 3.9% technology, 1.4% cash
Charges: Initial up to 5%, annual 1.5%, performance fee up to 2%
Commission: Initial 3%, renewal 0.5%
Special offer: Initial commission up to 4%
Offer period: until July 31, 2008
Tel: 020 7319 4215
Ingenious Asset Management has made its ‘best ideas’ multi-manager UK equity fund available to retail investors through IFAs.
Michael Philips proprietor Michael Both says: “This is an “only best 10 ideas” fund with the twist being that these are being selected by three UK equity managers, Investec, BlackRock and Origen. Stating the obvious, the portfolio is extremely concentrated and consequently each holding will have a very significant effect on the fund’s overall performance, for good or ill.”
Both assumes the underlying concept runs along the lines of that if each manager comes up with their very best ideas, the fund is bound to beat the market. “It is not difficult to pick holes in that argument on the grounds of diversification. The only true test is whether it beats simply picking the 10 biggest stocks in the FTSE 100. If it doesn’t, why should the investor suffer the annual management fees?”
A quick glance at the past performance of the competitors shows Both just how much risk the investor is required to accept. “Serendipity is often the most successful manager with the benefit of hindsight.”
Looking at the potential drawbacks of this fund Both observes that performance has been very volatile. He says: “With such a small portfolio one might be forgiven for thinking that fees would be at the low end of the scale. After all, if the managers are going to hold 10 stocks and are taking a long-term view, you might expect that the research is going to be a little more concentrated. Each time you trade, it is 10 per cent of your fund which is being dealt, so there ought to be an opportunity to negotiate a low commission with the brokers. Logical, but apparently wrong.”
“It might be explained by a higher turn-over of the portfolio, although why would be the case if your 10 best ideas really were that good? I’m sure Ingenious thinks it will justify a performance bonus of up to 2 per cent on top of already average charges, although whether your clients agree will depend on the results. These have been decent overall since launch in 2003, although rather less impressive over the last year, which emphasises my point.
He expects Skandia IM UK Strategic Best Ideas and T.Bailey UK Best Ideas funds to provide competition for this fund.
Suitability to market: Average
Investment strategy: Average