Type: Unit trust
Aim: Income and growth by investing globally in equities and fixed-interest securities
Minimum investment: Lump sum £1,000
Investment split: 26.7% Pacific ex Japan, 22.9% Europe ex UK, 19% US, 14.4% Emerging markets, 13.8% Japan, 3.2% cash
Isa link: Yes
Pep transfers: Yes
Charges: Initial 5%, annual 1.6%
Commission: Initial 3%, renewal 0.5%
Tel: 020 3008 8030
Flowers McEwan director David Flowers believes this is an interesting and unusual fund that have appeal to investors with larger portfolios who wan tto diversify into an international fund and retain a reasonable level of income.
“That is quite hard to find without being significantly invested in fixed-interest funds. Provided the investor can stomach the charges and higher potential volatility of the fund it could fill a useful niche,” he says.
Considering the negative features of the fund Flowers says: “Understandably the fund costs more to run but with a total expense ratio of 2.84 per cent the reduction in yield jumps to an eye-watering 3.5 per cent. The fund is going to have to deliver quite substantial rewards to justify that level of cost,” he says.
He also points out that Newton runs its investment management on a team basis with the managers selecting the best ideas from across the team. “This may appeal to some investors but seems inimical to the more aggressive style needed when investing in the emerging market sector.
“Additionally there are no geographical or asset class constraints which gives rise to a higher-risk profile in the absence of knowing what the managers are likely to do,” he says.
However, Flowers also feels it is likely that with a team based approach, extremes of geographical or asset class allocation are unlikely to occur.
Looking at the market to spot the potential competitors, Flowers says: “Part of the attraction is that there aren’t any real competitors of note in this niche. There are several emerging market funds and a few international income funds but they don’t provide a very substantial income.”
Flowers feels Neptune’s combination of income and emerging market options is, if not unique, unusual. “It will be interesting to see if they can deliver,” he says.
Suitability to market: Good
Investment strategy: Average
Adviser remuneration: Average