Rowan & Co Capital Management – Dynamic Theme Fund
Type: Unit trust fund of funds.
Aim: Growth by investing in technology funds.
Minimum investment: £1,000.
Investment split: 15 per cent Aberdeen technology, 15 per cent Henderson technology, 10 per cent Scottish Equitable technology, 10 per cent Mercury global titans, 10 per cent GT Dynamic theme, 10 per cent Sarasin websar, 5 per cent Framlington health, 5 per cent Schroder medical discovery, 5 per cent Gartmore techtornado, 5 per cent Framlington Net Net, 5 per cent Finsbury universal life sciences, 5 per cent Invesco European growth.
Isa link: Yes.
Pep transfers: Yes.
Charges: Initial 3.5 per cent, annual 1.5 per cent.
Commission: Initial 3 per cent.
Tel: 01225 469424.
Christopher Collins – Director, Kensingtons Investment Management
Martin Dilke-Wing – Director, Morgans Independent Advisers
Godfrey Bloom – Investment Director, TBO Corporate Benefit Consultants
Roy Rutter – Principal, Aptitude Financial Planning
Broker Ratings (ave. marks out of 10):-
Suitability to market: 6.0
Investment strategy: 6.1
Past performance: 4.3
Company's reputation: 4.3
Product literature: 4.9
Rowan & Co has brought in the Rowan Dynamic theme fund, a unit trust that invests in a broad range of technology-related funds.
Looking at how the fund fits into the market, Bloom feels that it is another thematic genre product.
Dilke-Wing says: “This is a market that is rapidly evolving. There is a growing trend towards fund of funds investment. This is likely to be particularly so in the area of high- tech collectives where advisers may be wary of taking the responsibility for recommending a single product. This fund appears to be very similar to the competition.”
Collins says: “This is a niche market fund which will appeal to those investors who want some excitement in their portfolios and who will appreciate the wide spread available through this fund of funds.”
Rutter says: “In being a fund of funds rather than just another technology trust, it has a place in the market. However, the technology marketplace is overcrowded at the moment.”
Looking at the type of client that the product is suitable for, Dilke-Wing says: “The fund is suitable for aggressive investors who are seeking exposure to this sector without having to select one specific manager.”
Bloom says: “The Dynamic theme fund is for clients with existing balanced portfolios who wish to add a higher-risk aspect for long-term growth.”
Rutter says: “It is suitable for someone who has held back from technology and themed investments so far and who likes the reduced volatility that a fund of funds offers.”
Turning to the types of marketing opportunities that the product provides, Collins says: “This can be marketed to clients who have no current exposure to either thematic or high-tech investments.”
Rutter can see very few opportunities, while Dilke-Wing says: “The product will not provide any direct marketing opportunities. Marketing a fund of funds on a mass basis is never practical. The lack of name awareness for the manager and administrator does not help.”
Collins feels that the opportunities will be for: “Initially an existing client base, those who are aware of the continuing and increasing technology and internet revolution.”
Examining the strong features of the product, Rutter points to the low initial charges. He also mentions the good spread between unit and investment trusts and the established and newer trusts.
Collins says: “The proposed portfolio is a good mixture of the proven and the new, with all the new growth areas in the longer term being represented. The inclusion of technology, the internet and biotechnology is interesting.”
Bloom says: “The concept of a balanced portfolio of high-risk collectives is not unreasonable.” Dilke-Wing adds: “The main strong point of the product is that it facilitates exposure to the technology and related funds without the need to select a specific manager or geographical area.”
Looking at the disadvantages of the product, Dilke-Wing says: “The product does not do anything that cannot be done elsewhere and I doubt if Rowan & Co is a name that is known to many of my clients.”
Bloom says: “All fund of funds have an element of double charging. A manager has to be very able to make the difference – some do but most do not.” Rutter says: “It is entering the technology/ themed investment arena late in the day. While many of the constituent trusts are known and established, who has heard of Rowan?”
Collins adds: “This fund is higher risk rather than high risk. It will not be for the faint hearted.”
Evaluating the investment strategy, the panel are split. Rutter is not positive. He says: “The strategy is quite narrow. I would have liked to have seen an ethical fund and a smaller companies fund.”
Dilke-Wing agrees. He says: “It is hardly dynamic, is it? While the literature talks about analysis and fund management meetings, I think that most competent investment IFAs could have come up with the original split.”
However, Collins says: “For the area of the market being covered, the investment strategy is very good and should produce high long-term gains.”
Looking at which products provide the main competition, Bloom says: “There is the Sarasin techmark, which is a thematic tech fund with a proven track record. Also, Henderson would argue that its fund is thematic and unrestricted.”
Dilke-Wing says: “The main competition includes the Portfolio tech fund, Ways laser portfolio and various other portfolio management services run by Edinburgh, Quilters, Berry, etc.”
Rutter points to individual theme funds such as the Invesco global dynamic theme fund and various funds of funds from companies such as Exeter and Premier.
Turning to the reputation of Rowan, Collins says: “As it mainly manages funds for private clients, pensions, etc, there is not a lot in the unit trust market domain. Only two unit trusts run by them are listed prior to this one.”
Bloom does not think that the company's reputation is strong enough to sponsor this launch, while Dilke-Wing says: “I do not know anything about Rowan's reputation. It does not appear to have much under management and the only collective fund it manages that I could find has distinctly average performance.”
Commenting on the charges, Collins says: “The initial charge is very reasonable but the annual charge is in the high range.”
Dilke-Wing says: “The charges appear to be fair and reasonable and competitive in this arena. While charges are important in this type of investment, the extra tier of charges means that the ultimate indicator of quality will be outperformance.”
Looking at the commission available, Rutter feels that it is what an IFA would expect, while Bloom says: “There is no renewal commission for IFAs, who could expect a fund like this to be a long-term core holding for an investor.”
Collins says: “The commission is fair and reasonable. It is nice to see a new product coming into the market without the managers trying to buy support.”
Turning to the product literature, the panel are lukewarm. Bloom thinks that the literature is modest, while Rutter says: “The key features document is dull but serves the purpose. The preliminary brochure is concise but I would have liked some more information on the constituent trusts, some past performance and more about Rowan.”
Collins says: “It is clear and easy to read and does not go over the top. The application form is well laid out. More detail of Rowan and some past performance could have been included.”