Multi-manager specialist Miton Investments is making its debut in the IFA market with its fourth fund of funds.
The CF Miton special situations fund is based on a pension fund that the company has managed since 1998. It will be run on a core and satellite model with defensive assets such as cash and gilts providing a low-volatility base. Potential returns will be boosted by around 30 per cent in special situations funds, which may include investment trusts. These satellite funds will invest mainly in equities, so will add a more aggressive element.
The fund will not have a benchmark index as Miton's investment team believe benchmarks increase volatility and limit diversification. Instead, they will gauge the fund's performance relative to the balanced managed sector average.
In Miton's view, managers that use benchmarks will hold funds that do well in bear markets simply because they must have exposure to some sectors. Miton's philosophy is to focus only on managers who perform well during bull markets because the investment team will not invest in a region or asset class they are not confident about.
When constructing the portfolio, Miton's investment team will first make asset allocation decisions about where to invest. Currently, they do not like the US, so this fund will not initially have any US exposure.
Miton's freedom from benchmark indices and the ability to go entirely with their convictions is refreshing when combined with the defensive core. However, it may take time for Miton, as an unfamiliar name, to establish itself among IFAs.
Data from Trustnet shows the CF Miton strategic portfolio is ranked first out of 86 multi-manager funds in the IMA balanced managed sector over three years to October 25, 2004. It delivered 26.7per cent during this period compared with the sector average of 3.9 per cent.