Aim: Growth by investing mainly in UK equities
Minimum investment: Lump sum 1,000
Investment split: Up to 100% in UK equities, up to 10% in overseas equities
Isa link: Yes
Pep transfers: Yes
Charges: Initial up to 5%, annual 1.35%, performance fee 15%
Commission: Initial 3%, renewal 0.5%
Tel: 020 77475676
JOHCM UK Opportunities is an Oeic investing in UK equities.
French & Associates managing director Keith French notes that in the current environment the top 10 stocks in the FTSE All Share account for more than 60 per cent of the index.
Consequently he feels this fund provides an index unconstrained opportunity for investors who would like to achieve an attractive level of capital growth over a business cycle of two to four years and who accept some volatility during this time period. This fund is suited to those investors who can accept a higher level of risk within the overall portfolio, he says.
The fund managers track record is next on Frenchs list of discussion points. While the fund manager, John Wood, did well managing the Newton UK Opportunities Fund, which fund manager has not achieved reasonable results in this sector over the past two or three years? he asks.
French points out that past performance is no guarantee for future performance. It takes more than a fund manager to perform. Researchers and analysts are also key to assisting their fund manager to produce results, he says.
According to French, the funds initial charge of 5 per cnet and the total expense ratio of 1.8 per cent is not out of line with the market. However, he feels the sting in the tail is the 15 per cent performance related fee. This is designed as an incentive for the manager to perform well, but surely this is what he should be doing in any event? Sacrificing commission can reduce the initial charge but the IFA has to be remunerated somehow.
Moving on to a fuller discussion of the potential drawbacks of this fund French says: Charges make this produce uncompetitive and also the fund manager has only had a little over three years managing a fund in a good market. The question remains how will the fund perform in adverse market conditions.
French feels competition will come from Schroder UK Alpha Plus, Gartmore UK. Focus, Invesco Perpetual UK Aggressive, Threadneedle UK. Select.
Summing up, he says: While historically the majority of new funds have performed well, and getting in at launch is advantageous, I will be holding back and keeping an eye on this one.
Suitability to market: Average
Competitiveness of rate: Poor
Adviser remuneration: Average