The Threadneedle UK Limited Issue fund, now called the UK Accelerando fund because it is also being marketed in Europe, was launched in May 2003. Since then, the share price has risen by 31.6 per cent versus the rise in the FTSE All Share index of only 17.9 per cent to August 31, 2004.
This fund was the first of its kind to take advantage of the new Ucits 3 and CIS rules to limit the size of the fund and explicitly use new powers to hold cash positions and certain types of derivatives when market conditions demand.
It is the first ever fund in the UK market to charge a true performance fee which is only payable if the performance exceeds that of the FTSE All Share index by more than 2 per cent.
The fund can invest in any size of UK company, large, mid and small caps as well as initial public offerings. There are no sector constraints and the ability to hold large amounts of cash when market conditions dictate enables the managers to be much more flexible.
The fund is managed by Mark Holden, formerly a senior fund manager at HSBC and a director of ABN Amro. He is part of the UK high alpha team at Threadneedle.
The fund has achieved its high performance by making regular use of cash to help shelter the portfolio from market volatility and by excellent stock selection. It invests in only 30 stocks and, at the moment, much of the portfolio is invested in natural resources including Cairn Energy, which has performed particularly well and is likely to be promoted to the FTSE 100 index shortly.
The fund is limited initially to 100 million shares, which ensures that the fund can remain nimble and aggressive, so it is wise for IFAs to use this fund as the growth part of a client's equity portfolio. I strongly recommend it.