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Product matters

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&#39s 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&#39s 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


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