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Manek progression

After Jayesh Manek&#39s success in the fantasy fund league, he has set up Manek Investment Management and is testing the water in the unit-trust market with the Manek growth fund.

Divers says: "There are currently 162 UK equity growth funds, so one might well ask why we need another. The top fund produces over 36.9 per cent over one year with the worst losing 5.7 per cent, so it should not be hard to produce an average return. Only time will tell whether it becomes an industry standard."

Newcombe says: "The fund fits in very well. The aims of the trust are consistent with others in this sector."

Pack says: "As a newcomer with no track record, it is gambling on being accepted."

Both says the fund is definitely not for widows and orphans. He says: "Given the lack of experience in running a fund of the size that this will doubtless become, investors are clearly taking a punt."

Ruddy says: "This is for the higher-risk, larger portfolio."

Pack says: "This is for experienced investors looking for a bit of fun."

Divers believes the fund is suited to speculative clients who will take a risk on Manek&#39s fantasy track record. He says: "Manek will have to build a long-term track record and consistent performance. The industry has seen too many of these wonder boys who make a quick fortune and bail out, leaving investors high and dry.

"I am not at all confident in recommending this to my clients. If he is so good, why haven&#39t Jupiter or Perpetual or one of the big boys snapped up this genius for £1m a year guaranteed bonus."

But Newcombe says: "I would be confident so long as I knew that the investor fully understood the stockmarket to the extent of knowing most of the trust&#39s major holdings and so long as he appreciated the strategy behind the trust."

Divers thinks the launch could provide some marketing opportunities, albeit to a limited audience. He says: "Some investors will like the idea of getting in on the ground floor of what could be a very good- performing trust."

Both says: "Initially, it may be of interest to my clients who have some spare capital for higher-risk, speculative investment."

Ruddy highlights the fund&#39s main strong feature as the small, hand-picked portfolio.

Divers says: "It is always good to see new ideas and approaches and thematic investment is currently the buzz- word. The Templeton portfolio, which Manek managed previously, shows this approach and it is long overdue on this side of the Atlantic."

Analysing the disadvantages of the fund, Divers and Pack are concerned that there is too much resting on the ability of one man.

Divers says: "There are also other family members in authoritative positions and there is a lack of reporting responsibility. This is a high-risk situation in a lower-risk investment category."

Newcombe highlights the lack of track record with no industry history or previous name awareness. However, he says: "Manek&#39s achievements to date have been impressive and the launch appears very professional. But I feel that most people will be a little sceptical until he produces some consistent returns over three to five years."

Divers says: "You cannot call two fantasy performances a reputation, however startling the results."

Sir John Templeton&#39s private portfolio is to be transferred into the Manek growth fund although the investment strategy will not necessarily continue in the same fashion.

Commenting on the Templeton approach, Newcombe says: "I am happy with the structure and the strategy and believe that the type of holdings in the Templeton portfolio will produce good returns as interest rates begin to fall over the next year or so."

Divers says: "The funds in the Templeton portfolio are smaller companies but obviously Manek does not see this as a particular strategy. It is obviously where most growth prospects lie and is where most failures occur so, whatever else happens, you can be sure that Manek will be kept on his toes."

Both says he would require more detail before he could confidently recommend the fund to his clients. He says: "The record is based on picking a few small companies in a raging bull market. The question is, how well will he do with larger-cap shares in a flat or falling market?"

Ruddy believes there will be little competition to the fund from others in its sector although he adds: "Possibly Schroder Enterprise and some special situations funds."

Pack names Slater Walker as the main competition.

Turning to the charging structure, the panel express differing views.

Newcombe and Ruddy say the charges are fair but Pack says they are high, especially on the Pep. However, Both and Divers believe that Manek should adopt a different basis.

Both says: "If Jayesh is as good as he is billed, then he should have a profit-related fee linked to the performance of his fund relative to the benchmark sector average.

"Since we are being asked to buy based upon his skills alone, let him profit from this or fail to profit if he does not deliver."

Divers says: "Shouldn&#39t fund managers be structuring their charges on a performance- related basis? If this guy is that good and proves his worth over time, he should have the confidence to charge a percentage of annual performance."

All the panel agree that the commission is reasonable.

Newcombe says: "It needs to be as high as this since I believe this will require more input in the sales process."

Pack describes the product literature as clear and well laid out and believes it is ideal for the novice investor.

Newcombe says: "I liked it. It is clear and comprehensive but I would have liked more detail on the intended holdings."


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