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Product matters

The fund management arm of HBOS, Insight Investment, launched its UK dynamic fund this week.

It is managed by top-performing fund manager Neil Pegrum, who joins the group from M&G where he worked for 16 years.

His strong performance led to AA and five-star ratings from Standard and Poor&#39s.

Over three years, his M&G British opportunities fund produced a return of -2.44 per cent compared to its benchmark return, the FTSE All Share Index, of -24.82 per cent.

The fund will be a high-risk, concentrated portfolio designed to invest in what Pegrum deems are “high conviction” stocks which are those he strongly believes will deliver good returns. In its main, the fund will consist of 25-40 stocks with no sector constraints.

His strategy is to buy stocks on the basis of the quality of the business, the business opportunity and its valuation. Pegrum said he plans to ask himself daily whether he would buy the stock at its current price. He will sell if one of the above three factors changes notably or once the stock&#39s price has reached its target.

Pegrum&#39s fund management is unquestionable. You only have to look at his performance at M&G to see his credentials.

However, the UK dynamic fund will be more concentrated than his previous fund and therefore will be more volatile and aimed at investors with higher attitudes to risk. That said, it would add diversity to a balanced portfolio.

Darius McDermot is managing director of Chelsea Financial

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