Type: Oeic fund of funds
Aim: Growth by investing in a range of asset classes mainly through a portfolio of investment funds
Minimum investment: Lump sum £1,000
Investment split: 30% Asia/emerging market equities, 24% overseas developed market equities, 20% UK equities, 10% macro/trading strategies, 7.5% private equity, 5% corporate bonds, 3.5% cash
Isa link: Yes
Charges: Initial 5%, annual 1.5%
Commission: Initial 3%, renewal 0.5%
This Oeic fund of funds in the third in Rathbone’s range of multi-asset portfolio funds.
Michael Philips proprietor Michael Both says: “Rathbone enhanced growth portfolio is a non-Ucits retail scheme aimed at higher-risk investors with a time horizon of at least five, and preferably 10 years. It aims to generate, on average, 2 per cent above the returns from a combination of 70 per cent MSCI World index and 30 per cent MSCI Emerging Markets index over the long term. Volatility is targeted to be 100 per cent of equity volatility which doesn’t sound unrealistic. To avoid conflicts of interest it will only invest in non-Rathbone funds.” He adds that the minimum investment amount is low.
Discussing the potential drawbacks of the fund Both says: “Because the fund has such wide potential investment universe it will be difficult for investors to know how much it will overlap or complement other holdings they may have, or to gauge how well Rathbone is achieving its aims. Although some may consider it a strength, there are so many people involved in the investment decision making process – 47, with a combined 562 years of experience according to Rathbone’s literature. There must be a real danger that rather than designing an investment racehorse, the Rathbone committee of committees ends up with an expensive camel fit only for Methuselah.”
Both expects Rathbone to face competition from Verbatim Portfolio 9 and Cazenove multi-manager diversity.
Summing up, Both says: “With the “20-20 hindsight regulator” apparently obsessed with ensuring no investor faces any risk for anything ever again, it is hardly surprising there are so many managers launching risk-controlled volatility-defined funds. At least Rathbone has some experience of running these for more than a fortnight, but it is still rather too soon to draw any meaningful conclusions as to the manager’s merit relative the abundant competition.
“To have launched on August 1, 2011, in the midst of a perfect financial storm, was certainly brave. Starting with a clean slate gives the manager the luxury of being able to pick precisely what he believes will be appropriate for this incredibly difficult climate. We note that the fund fell over 8 per cent in its first month, some 3 per cent worse than its sector. To be fair, this is not the target time frame over which to judge such a fund but it is less than encouraging. Perhaps time will prove it to have been an ideal moment for a contrarian fund manager to pick up bargains at distressed prices.”
Suitability to Market: Good
Investment Strategy: Average
Adviser remuneration: Average