io Investors has unveiled the io inflationplus fund, an Oeic fund of funds that aims for income and capital growth of 5 per cent above UK inflation.
io Investors chose the Retail Prices Index as a benchmark because a direct link enable the fund's returns to outpace inflation. Inflation erodes purchasing power over time and io investors think it is more difficult to monitor this using traditional bond and equity indices.
The fund will achieve its objective by investing in funds which in turn invest globally in corporate and government bonds and equities. It will be managed by PSolve Asset Solutions, a sister company of io Investors. Psolve is an investment adviser that creates tailored investment portfolios for company pension schemes, charities, local authorities, financial advisers and insurance companies.
Psolve is headed by Mike Faulkener, who has 11 years' experience in consulting an asset allocation. He will be assisted by Carol Allison who has eight years' experience in asset allocation and manager research.
Faulkener and Allison will take into account economic conditions, market valuations and preservation of capital when deciding how much should go into each asset class. They will then screen the universe of fund managers. Those that pass the initial screen are interviewed during company visits and this is followed by telephone interviews to establish which managers are best at managing which type of asset or region. Once selected, the managers are constantly reviewed along with the overall asset allocation strategy.
This fund gives retail investors with small amounts a chance to benefit from institutional style asset allocation and fund management. The fund's freedom to use any asset class, any fund manager and any management style may be attractive as market conditions change. However, some IFAs may feel uncomfortable with recommending a fund which has no constraints, especially as they have no input when asset allocation decisions are made.