Morley Fund Management, which is part of CGNU, has introduced its UK focus fund.
This open-ended investment company (Oeic) aims to produce capital growth by investing in a concentrated portfolio of between 30 and 40 UK stocks. It is managed by David Lis, who presently runs the Norwich UK growth and UK equity funds.
Unlike those funds, the UK focus fund will not be constrained by a benchmark index. The use of benchmarks can lead to mediocre returns when the stockmarket is falling because fund managers are obliged to hold stocks just because they make up the index. The UK focus fund will only hold stocks if the fund manager believes they deserve a place in the portfolio.
This means it will depend heavily on Morely Fund Management's research and analysis skills to highlight the best stocks. A team of economists and analysts are employed to meet companies and gather information on them. The fund manager will then use this information to construct the portfolio of stocks.
Eighteen months of falling stockmarkets has left many stocks undervalued and the UK focus fund aims to take advantage of this in sectors like telecommunications, mining and engineering.
As a specialist type of UK fund, the UK focus fund is more suitable for experienced investors who are looking for a riskier fund offering higher potential rewards than general UK funds that provide greater diversity.
According to Standard & Poor's, the Norwich UK growth fund is ranked 111 out of 242 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to October 8, 2001.