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Old Mutual spreads its bets on smaller companies


UK Select Smaller Companies Trust

Aim: Growth by investing in a portfolio of companies in the UK smaller companies market.

Minimum investment: Lump sum £1,000, monthly £50.

Investment split: Any proportion of 50-60 companies in the UK smaller companies market.

Isa link: Yes.

Pep transfers: Yes.

Charges: Initial four per cent, annual 1.5 per cent.

Commission: Initial three per cent, renewal 0.5 per cent.

Tel: 0808 1003579.

Suitability to market 8.2

Investment strategy 7.4

Past performance 6.4

Company’s reputation 5.8

Charges 7.4

Commission 7.2

Product literature 8.0

Old Mutual has introduced the UK smaller companies trust, a unit trust that invests in 50 to 60 UK companies spread over the old and new economies.

Looking at how the fund fits into the market, Bloom says: "There are 76 smaller companies funds available in this sector. There are also 76 corporate bond funds. There is something of a consensus view that both sectors could perform well in 2001, so perhaps there is room for another company with a proven track record."

Chitroda says: "The Old Mutual fund fits in nicely. There appears to be a fashionable trend recently in clients investing in smaller companies for the potential of higher returns but also more volatility."

Lakey says: "Smaller companies has been the success story of the UK sector in recent years. This fund is likely to succeed due to the reputation of the fund manager and Old Mutual’s new found commitment to the market."

Moving on to the type of client that the fund is most suitable for, Bruce says: "This is for clients with a diversified portfolio or those with a high risk attitude who are looking for exposure to the UK small companies sector."

Campbell agrees. He says: "This product is for clients who are investing for growth and who are looking for a higher risk, actively managed, fund."

Lakey says: "This is for the longer term investor who understands that this sector will include a proportion of volatile technology stocks," while Chitroda adds: "The product is for someone who is a medium to high risk investor who is looking at the medium to long term investment view. It is certainly not for risk-averse investors."

Evaluating the marketing opportunities that the product provides, Bloom says: "This offers opportunities to market it to clients or potential clients who buy into the story that 2000/2001 is the time to play smaller company stocks."

Campbell says: "Old Mutual is able to promote the opportunities available in the small to mid cap sector. Also there is the strong performance record of fund manager Ashton Bradbury, reflected in Standard & Poor’s recent award of an AA rating for the fund."

Lakey says: "Astute and experienced investors may wish to get in on the ground floor of what appear to be a successful fund launch."

However Chitroda disagrees. He says: "There are negligible marketing opportunities here. The market already caters for this type of fund and in my opinion a fund with a track record would be ideal rather than a new fund with a question mark over its future performance."

Identifying the main useful features and strong points of the product, Lakey says: "New funds often offer growth opportunities due to the positive cash flow. This and the reputation of fund manager Ashton Bradbury are the main attributes."


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