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Martin Currie goes for unique opportunity



Type: Investment trust

Aim: Growth by investing in a portfolio of European private equity
funds and European direct equities

Minimum investment: Lump sum £100,000

Maximum investment: £2m

Investment split: European private equity funds 85%, European
equities 15%

Types of shares: Ordinary

Isa link: No

Pep transfers: No

Redemption date: July 1, 2013

Charges: Annual 0.7%

Commission: Initial 0.25%, renewal subject to negotiation

Tel: 0131 229 5252

The panel: Bruce MacFarlane, Partner, Capital Trust Financial
Roy Rutter, Principal, Aptitude Financial Planning,
Mark Dampier, Head of Research, Hargreaves Lansdown

Investment Philosophy 7.3
Past performance 7.5
Company&#39s reputation 8.0
Charges 5.0
Commission 5.0
Product literature 5.6

Martin Currie&#39s European private equity fund is an investment trust
that invests in a portfolio of private equity funds and European

Considering the trust&#39s market suitability MacFarlane says: “Uniquely,
it is one of very few products set up to exploit a broad range of
investment sub categories such as management buyouts, venture
capital and mezzanine finance.” Rutter says: “This is a very
complicated market. Martin Currie has the advantage of being a
known name but I am not sure European markets are the place to be
at the moment.” Dampier says: “It doesn&#39t fit within the retail market.
This is a specialist investment product.”

Identifying the type of client for whom the product could be suitable,
Dampier suggests it is only for high-net-worth clients who have over
£1m. MacFarlane says: “High-net-worth, higher-risk clients who want
access to a broad range of early stage financing opportunities.
Investors who have the foresight to see that now as an opportune
time to invest in quality companies which have been affected by weak
stockmarket and traditional sources of finance such as banks reining
in their lending. The trust is aimed more at the institutional investors
than the retail investor.” Rutter says: “Sophisticated high-net-worth
clients who are prepared to take on higher risks. It offers potentially
higher returns but has a high entry level.”

Assessing the trust&#39s marketing potential Dampier says: “I don&#39t see
any. This is a product for just a few wealthy clients.” Rutter says: “I
don&#39t see many within my client bank.” MacFarlane says: “Limited in
the current economic and stockmarket conditions as most investors&#39
appetite for risk has substantially changed over the last three years.
Many investors will not have the initial £100,000 investment

Highlighting the main useful features and strong points out the trust
MacFarlane says: “It provides unique access to the private equity
market, an investment market which has not been readily accessible
to the retail investor to date. If offers broad access to a diverse range
of specialist funds with good track records in this investment area.”
Rutter mentions the experience and strength within the private equity
team, Martin Currie&#39s experience in this investment arena and its
availability to corporate and pension scheme investors.

The panel evaluate the trust&#39s investment philosophy. Rutter says:
“The philosophy has worked successfully for Martin Currie and other
investment houses such as Credit Suisse, in the past. Much will
depend on the stockpicking.” MacFarlane says: “I like the investment
philosophy and feel a fund that can exploit the regular opportunities of
the private equity market under a strict due diligence process should
provide investors with excellent returns.” Dampier believes the trust
has a strong team behind it but does not know enough about its
investment philosophy to comment further.

Examining the drawbacks of the trust Dampier says: “This is a
long-term investment for at least 10 years, making its appeal limited.”
MacFarlane says: “A continued slowdown in global economies will
dry up investment opportunities for this type of trust. At the same time,
the likelihood of company failures will increase. The trust does have
a high initial investment minimum of £100,000 although investors
who want access may wait for a flotation, enabling them to invest at
lower levels.” Rutter says: “It has a high entry level and is at the upper
end of the risk scale. This is not a product for the average investor.
The charges appears cheap initially, but they are high.”

Discussing Martin Currie&#39s reputation Dampier says: “It is generally
very good but hasn&#39t made a name for itself in continental European
equities.” MacFarlane says: “Martin Currie has a strong reputation for
providing access to niche markets such as emerging markets and it
has an excellent investment trust track record.” Rutter says: “In this
niche area, it is quite good. Overall, its retail funds have shown mixed
returns, although its European and venture capital investment trusts
have been consistently above average. It is not the best known of
names to the public, although it is fairly familiar with advisers. I&#39ve
always perceived it as low-key.”

Turning to Martin Currie&#39s past performance record MacFarlane says:
“It is very good across the investment trust spectrum.” Rutter says: “It
is mixed. Its European and venture capital investment trusts are
consistently above average but its unit trusts are generally no better
than average. It is still probably best known to investors for its Japan
fund.” Dampier reiterates his earlier point that the company is not
well known for its European experience, but adds that it has gradually
been building up an equity team in this area.

Highlighting potential competitors for the trust, the panel cannot
suggest any similar products and feel the competition will be

The panel consider the charges. Rutter believes they are high but
adds this is to be expected in this area of investment. MacFarlane
says: “The charges are relatively difficult to interpret with Martin
Currie&#39s preferred profit share and presumably charges on the
underlying funds into which it will be investing.” Dampier says the
annual management charge is fair but the performance fee looks
really hefty.

The panel complain that commission details are not included in the
literature. The 0.25 per cent initial commission is felt to be too low,
although this can be boosted by negotiable renewal commission.

Looking at the product literature MacFarlane says: “It is
comprehensive and about as exciting as any information
memorandum could be. An additional marketing document may help
to clarify the trust.” Dampier says: “Too many lawyers have written it,
like all information memoranda.” Rutter says: “This is not a
mass-market plan, therefore the literature should be judged by
different standards. It is comprehensive, wordy and factual. Nothing

Summing up Dampier says: “Given the state of European markets,
this looks an ideal time to launch this product.”


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