Insight Investments European Discretionary Fund
Aim: Income by investing in European (excluding UK) companies
Minimum investment: Lump sum £2,000, monthly £100
Investment split: 100 per cent in European (excluding UK) companies
Isa link: Yes
Pep transfers: Yes
Charges: Initial 5.25%, annual 1.5%
Commission: Initial 3%, renewal 0.5%
Tel: 0845 8506050
David Divers, principal, Sandringham Investments
Malcolm Hooper. Partner, Independent Financial Advisory Service
Scott Wylie, investment manager, Aitchison & Colegrave
Suitability to market 5.0
Investment strategy 5.6
Past performance 4.6
Company's reputation 5.3
Product literature 8.0
Insight Investment has introduced the European discretionary fund, an Oeic which invests in European (excluding UK) companies.
Looking at how the fund fits into the market, Divers says: "With over 100 funds in the sector already another European fund and another group of fund managers is hardly what the market place needs right now. Unless, like some of the more innovative boutiques they have something better to offer." Hooper thinks it is difficult for any fund to fit into the current market conditions, he goes on to say: "However the fund is very well diversified." Wylie says the fund is a mainstream product investing in larger European companies giving diversification via a range of different economic sectors with no particular emphasis on country.
Turning to the type of client the fund is suitable for, Hooper says: "Medium to high risk." Wylie thinks it seems to be the type of fund that you would give to a balanced investor as a core holding in the Europe excluding UK sector. Divers says: "Most probably, existing clients of the Halifax and Bank of Scotland group (HBOS). I find it hard to imagine that IFAs will promote sales of it, or the company's other funds, until a credible track record is established.
Analysing the marketing opportunities the fund will provide, Wylie says: "As a new fund from a new group, it would be easily marketable, especially given the experience and performance of the lead managers, Iain McNeill and David Headland." Hooper feels it would not offer any marketing opportunities at this time as confidence from the consumer is at an all time low. Divers says probably quite a lot for HBOS counter staff and direct client mail shots but very little for IFAs.
Listing the main useful features and strong points of the fund, Hooper points to the diversification offered, the research and strong selling disciplines to take profits. Divers says the Oeic structure has better flexibility than many others. Wylie says: "The fund will be actively managed, with an emphasis on those companies demonstrating both strong management and good financial strength. It will take advantage of current market volatility by taking short-term positions on oversold stocks. The managers have strong sell disciplines in place, both on the upside and the downside."
Discussing the investment strategy, Divers says: "Essentially its stated objectives are no different to any one else's. They all want to make money for investors. A better strategy would be to seek outright value and growth regardless of sector or other criteria."
Wylie feels it is pleasing to a management team milling to implement an active strategy rather than follow an index very closely. He says: "Given the size of the fund, they will be able to use tactical positions to their advantage and trade in and out of stocks quickly and cheaply." Hooper thinks the fund managers seem to have done their homework with regards to core holdings and have majored on well know companies with innovative products.
Turning to the funds disadvantages, Hooper does not see any in particular. Wylie says: "Due to the risk controls in place, the fund still has to have a proportion of its assets in certain stocks and sectors, irrespective of whether the managers like that company or area."
Divers points to perhaps too structured investment objectives and too expensive for a minimum investment of £2,000. He says: "To many other manager's are doing better than Iain McNeill. The regular savings plan starts too high at £100 a month."
Discussing Insight Investment's reputation, Divers says: "No doubt they are proud of their inclusion in Ciywire funds insider." Wylie thinks it is a little early to comment on Insight's reputation. He goes on to say: "Although with the backing of HBOS. Their investment in new staff and a successful rebranding from Clerical Medical, they would appear a credible force in the market."
Looking at Insight Investment's investment past performance, Wylie says: "I think historically performance has been mediocre, although with a change of strategy and introduction of new funds and processes, this will improve." Divers thinks its long term past performance, has been better than short term. He says: "To gain credibility it must be consistent like Fidelity, Liontrust and Invesco Perpetual across a wide range of funds."
The funds the panel see as providing the main competition are Fidelity European, New Star European, Gartmore European select opportunities and Threadneedle Europe select growth.
Assessing if the charges are fair and reasonable, Wylie thinks they are in line with the average charges for the market. Divers thinks they are at the top end of the charges but in line with the industry norm. He says: "Annual charges should be levied in accordance with performance."
The panel agree that the commission is fair and reasonable, Divers says: "Three per cent initial plus 0.5 per cent trail is a standard average. Insight could introduce other options up to 4.5 per cent initial and no trail or no initial and 1 per cent trail, giving the IFA choice."
Looking at the product literature, Wylie thinks it is okay. He goes on to say: "A breakdown by country might be useful to demonstrate that one is not buying a fund invested 100 per cent in Germany." Hooper feels it is clear and easy to read. Divers says: "It is good. It's tastefully done not garishly plastic like many others. It's clear, well laid out but in some respects you have to hunt for information. The IFA guide could do with an index and page numbering. The fund literature frankly doesn't tell anyone anything of value."
Summing up Hooper says: "I feel that companies in this type of market should at least make themselves known to IFAs." Divers says: "I don't like banks doing investment management, by and large they would be better off sticking to banking and improving that, leaving investment mangers to do what they do best. Let's face it, the banking sector could do with a lot of improving."