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Old Mutual spreads its bets on smaller companies

Bruce agrees. He says: "It is managed by an investment team led by Ashton Bradbury. Ashton has more than 10 years experience in the small caps area of the market. There is also the flexible approach to fund management and the fact that it has achieved a Standard & Poor’s AA fund rating."

Chitroda says: "The fund has a focused investment approach and an AA Standard & Poor’s rating. Other plus points are the fact that it has an initial charge of four per cent and an experienced fund manager with a reasonable track record."

Turning to the other side of the coin, Campbell thinks that one drawback to the product is that it is not for the novice investor, while Bloom says: "Managers do not often perform well in a new environment. For example corporate culture ate Close Bros, where one of the fund managers comes from, and Old Mutual are miles apart. Will professional synergy work between the team members or will there be a clash of styles? Flair and actuarial science do not always make good bedfellows."

Lakey says: "Smaller companies funds will always be more volatile. Economic pessimists may feel that the timing of the launch is, perhaps, three years too late."

Looking at the fund strategy Chitroda says: "There does not appear to be any clear strategy. It appears to be set to react to market conditions and changes in business cycles. I suppose the only benefit appears to be the intention of obtaining consistent returns."

Bruce says: "Bradbury has proved that his investment strategy has worked well over the past ten years or so. He will therefore have a flexible approach."

Bloom says: "I like the idea of capping exposure to any one stock at five per cent and I think that the stock numbers of about 50 to 60 are about right. I also like the ability to invest in the Alternative Investment Market to £1 billion cap stocks, which should give the managers enough discretion to make bold sector plays."

Casting an eye over Old Mutual’s reputation in the market, Chitroda says: "Old Mutual is not a very well known name. It appeared a few years ago to be making a name for itself, especially on the back of the performance of its European fund. This subsequently faded and so has the old sparkle. Perhaps a higher marketing profile to IFAs could help, along with the introduction of annual trail fees."

Bloom says: "Old Mutual is a sort of South African Standard Life – a safe pair of hands," while Lakey says: "After a prolonged period of mediocrity it seems to be determined to become a major force in the market. The indications are positive and its reputation is improving."

Identifying the funds which provides the main competition to the product, Bruce points to the Hill Samuel UK smaller companies, HSBC UK smaller companies, Gartmore UK smaller companies, Jupiter UK smaller companies and Aberdeen UK emerging companies funds.

Chitroda says: "The competition would come from funds like Artemis UK smaller companies, Gartmore UK smaller companies, BWD UK smaller companies, Duncan Lawrie UK smaller companies and Rathbone smaller companies."

Bloom adds: "I see competition from the Capel Cure Sharp smaller companies fund, BWD Rensburg smaller companies and perhaps the new team at Threadneedle."

Looking at the charges, Campbell says: "The charges are standard, although the annual management charge is relatively high at 1.5 per cent. However you are paying for an actively managed fund."

Chitroda says: "The initial charge of four per cent is very reasonable compared to the typical five to 5.5 per cent for other products. The annual management charge of 1.5 per cent is normal."

Moving on to the product literature, Lakey says: "The literature is very good. The stockwatch case studied allowed an insight into the selection process."

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