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Innovation in £5k challenge

Structured product provider Product Innovation is challenging multi-managers to a £5,000 bet for charity that its new open-ended structured products will outperform their funds over the next 12 months.

Product Innovations managing director David Barclay-Miller says that although funds may reflect investors’ finan- cial objectives, the additional costs involved will reduce the overall returns.

He believes Product Innovations’ two capital-protected Oeics, part of the newly established Overture range, will outperform manager of manager and funds of funds due to a multi-asset class and low-cost index-tracking approach.

The Product Innovation funds, which are targeted at high-net-worth clients and the pensions market with a minimum of $100,000, will be linked to funds run by Frontier Capital Management. They will have exposure to eight asset classes including global equities, commercial property, hedge funds and managed futures.

According to Product Innovations, a tactical index tracking approach where exposure to underperforming asset classes is reduced in favour of the better performing areas will, in most cases, produce higher returns than actively managed funds.

The company also estim- ates that costs will be reduced by around 2.8 per cent.

Barclay Miller says: “If multi-manager is the new black in the investment industry, we’re saying we can beat it hands down. It is not an argument between active and passive management.

“A lot of active managers can beat an index but it is often the charges going on underneath that lower the returns.

“Through index-ation, we can get into asset classes at 0.2-0.3 per cent and that is why I am quite confident about the bet.”

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