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More than a gimmick?

This week saw the first UK best ideas vehicle hit its first anniversary as Rensburg’s UK manager focus trust recorded first quartile performance.

It came 28th out of 281 in the UK All Companies sector since its launch on September 4 2006.

Skandia is also approaching its first anniversary in October having also proved the doubters wrong by producing top quartile returns and shoving their words firmly down their throats.

Despite operating upon different processes many were quick to brand these vehicles as nothing more than marketing gimmicks, while others simply took the pessimist angle by stating that all stocks in a manager¹s portfolio should be their best ideas, with none taking precedence over the others.

Hargreaves Lansdown head of research Mark Dampier says that some commentators were simply too judgemental without looking at the facts.

He says: “Far too many made comments on the colour of the car, without getting underneath the bonnet. As for the best ideas notion, it’s the perfect way of diversifying and I’m sure you won¹t find many managers who will say they have had many bad ideas in their funds!”

While both have been tarred with the same brush, the funds are actually constructed differently. Skandia UK best ideas picks from 10 UK managers, making use of the group’s outsourcing ethos, while Rensburg gets exposure across all market-caps from its four UK managers with Mark Hall, Colin Morton, Stuart Sharp and Paul Spencer each running 25 per cent of the portfolio.

Dampier says: “Skandia got the majority of the heat from the market over the launch, while Rensburg seemed to tick the right boxes with a number of clients. The truth is that both have been big performers and that too many advisers have simply been too slow off the mark.”

Of course the UK vehicle is not Skandia¹s first foray in the best ideas market, having also launched a global fund back in June 2006 that has grown to £426m in size and ranking eighth in the active managed sector since launch.

Skandia is taking the notion a step further this month with the launch of a third best ideas fund that will allow chosen manager¹s to take up both long and short positions within the fund, while investment boutique T. Bailey is also set to come to town with its own UK best ideas portfolio on October 1.
The fund will be made of 10 UK equity funds, each with a weighting of 10 per cent.

Just like multi-manager years before, it seems any criticisms of these vehicles are beginning to be answered with interest. It is now more of a case of who will be the next firm to join the party.


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