It would not appear to be an ideal climate to launch a new fund but I suppose a fixed-interest fund would have more chance of success than anything else.
The Five Arrows monthly income fund appears to have a number of attractive features, not least of which is regular income. High-income bond launches have been frequent over the past 12 to 18 months and there is a tendency to regard this as yet another”me-too” product.
Retail investors have little experience of Rothschild Asset Management's fixed-interest expertise but it was recently named Fixed Income Manager of the Year in a poll of consultants. It manages the corporate bond fund for the nation's favourite underwear retailer. This is not the glowing recommendation it once was but is nevertheless of note.
The fund is a curious hybrid of investment-grade, higher-yielding and emerging-market bonds with a gross redemption yield of around 7.5 per cent net of charges. At outset, it is likely to be invested 50-50 between sterling and non-sterling bonds.
There are two share classes for retail invest-ors, enabling advisers to choose whether or not to incur an initial charge. Should they choose not to, there is an increased AMC of 1.5 per cent instead of 1 per cent over the six years during which an exit fee would be levied. After six years, the group will write to recommend a free switch to the lower-charging share class.
M&G and Gartmore should note investors will not be penalised for dying as no exit fee will be charged on death.A tentative thumbs-up for product design.
Paul Barnes is an investment manager at PlanInvest