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Newton widens doors on phoenix fund

Newton Investment Management has made its institutional Newton phoenix fund available to retail investors.

The fund, which invests in a range of asset classes, was originally designed for Newtons private wealth management clients. It aims to generate absolute returns with low volatility by investing directly in a portfolio of equities, bonds and cash, while also gaining indirect exposure to alternative asset classes such as property, private equity, gold and hedge funds.

Hedge fund exposure will be provided by investment in quoted funds of hedge funds, property will be accessed through property companies and investment trusts, private equity exposure will come from investment trusts and gold will be accessed through exchanged traded funds.

The fund has a target return of at least 2 per cent above cash over rolling three-year periods. Around 77 per cent of the fund is denominated in sterling while the remaining 23 per cent is denominated in dollars, euros, yen and Swiss francs. Non-sterling investments in bonds and hedge funds will be hedged back in sterling, but currency hedging will not apply to the other asset classes.

Allowing retail investors into a fund which has exposure to a wide range of non-correlated asset classes gives them the kind of diversification options that institutions have been enjoying for years. Each asset class performs differently so if market conditions change there should always be an asset class that is doing well.

However, this funds lack of Isa and Pep transfer options, plus a relatively high minimum investment of 10,000 means it is likely to appeal to the higher-net worth end of the market.

The fund will not provide as much growth as pure equity funds for some investors, this will be a sacrifice worth making as lower growth prospects are compensated by reduced volatility and lower risk.

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