View more on these topics

Sarasin gets health conscious



Type: Oeic

Aim: Growth by investing in pharmaceuticals, biotechnology and medical technology companies

Minimum investment: Lump sum £1,000, monthly £100

Investment split: Pharmaceuticals 40%, biotechnology 30%, medical technology 30%

Isa link: Yes

Pep transfers: Yes

Charges: Initial 5%, annual 1.5%

Commission: Initial 3 %

Tel: 020 7246 0430

Suitability to market 6.0
Investment strategy 6.7
Past performance 4.0
Company&#39s reputation 6.0
Charges 6.7
Commission 5.4
Product literature 7.4

The panel: Daniella Glover, Financial adviser, Stephens Harsant Wall,
Luke Gibbon, Proprietor, Independent Personal Financial Management,
Nikki Foster, Savings & investment manager, Chase de Vere.

The Sarasin global health fund is an Oeic that aims to produce capital growth by investing globally in pharmaceuticals, biotechnology and medical technology.

Considering the market suitability of the fund Foster says: “Global healthcare is a specialist sector fund fitting into the more speculative end of the managed funds range. It would not be used as a core fund, but would be held on the periphery of a portfolio to provide diversification.” Glover says: “It provides an additional fund to the very small and specialist health and medical sector.” Gibbon points out that the fund specialises in the healthcare industry, but more specifically in pharmaceuticals, biotechnology and medical technology.

Identifying the types of clients the fund could attract Glover says: “Clients with substantial resources in core holdings, who are looking to diversify in sectors with specific potential, and are prepared to take more than average risk with a view to the longer term.” Gibbon says: “This fund should only be used for clients who have experience of, and understand, equity investment.” Foster says: “Growth investors who are not risk averse and who already have a healthy and sizeable balanced portfolio, encompassing a wide range of sectors and global markets.”

Assessing the fund&#39s marketing potential, Gibbon thinks it could allow for diversification of existing clients&#39 portfolios, but feels it will be of limited use. Foster says: “It would fit nicely into a growth or specialist sectors mailing. The fund provides ideal means to capitalise on people&#39s growing awareness of health, and the role that the healthcare industry will play going forward in current market conditions. It may be difficult to sell as investors are currently more defensive following two years of flat markets or underperformance.” Glover thinks it could be used to broaden a portfolio to reflect modern daily life in a more conservative fund than many in the sector.

Highlighting the main useful features and strong points Foster says: “The fund provides an excellent opportunity for capital growth through exposure to potentially one of the largest growth industries. It can bring diversification to a portfolio through sector and geography, although with globalisation, there could be a debate about geography.”

Glover says: “The blending of a proven investment style based on themes, to develop the potential of a sector which seems to have long-term prospects. The management style may make performance less volatile. The investment team is experienced and qualified in both fund management and health technology.” Gibbon says: “There are very few funds that specialise in healthcare and this could prove to be a strong point.”

Discussing the investment strategy Glover says: “The style is thematic, with investment in both large companies in the pharmaceutical sector and the smaller cap companies in the biotechnology and medical technology sectors. This approach allows for development of the core themes of corporate restructuring and the use of technology, while blending stability and defensive qualities with the more unpredictable cutting edge.” Gibbon says: “The investment strategy will probably provide higher gains or losses as healthcare companies&#39 share prices can be quite volatile.”

Foster says: “Sarasin&#39s aim is to create well-balanced portfolios that capture major investment themes and trends. As globalisation is currently helping to break down geographical boundaries, fund managers are seeking to exploit growth through sector. Sarasin has been doing this and developing its strategy over the last 150 years, which places it strongly in the investment market.”

Pointing to the fund&#39s drawbacks Gibbon says: “It would appear that 25 per cent of the fund will be invested in five companies and clearly the performance of these shares could be crucial. Finally, there is a currency risk, as nearly 80 per cent will be invested in the US.” Glover says: “The fund is in a very specialist sector, which has proved to be rather volatile and so may not appeal to a wide audience.”

Foster says: “As the fund is themed, it is very specific in terms of which stocks it can invest in. External forces, for example, patents and regulations, can have a dramatic effect on some stocks, pushing prices both firmly up and down. As a result, there is potential for the fund to capitalise on fantastic highs, but there is also greater risk of loss. This increases the fund&#39s risk profile.

“Further points to consider are if another sector is leading the way, the fund will miss out. The healthcare market lies primarily within North America, so there could be implications for sector and geographical diversification if an investor&#39s portfolio already has a weighting there. The fund will mainly invest in growth stocks and will not be suitable for investors requiring income.”

Turning to Sarasin&#39s reputation, Glover sees it as a sound and well-established company. Foster says: “Sarasin has a strong reputation within the investment market, both as a bank and an investment house. It is especially regarded in the management of theme funds, of which it is a pioneer. It does not run a large number of funds, which for some is a concern, as it could limit flexibility for switching funds.” Gibbon says: “Sarasin is not widely well known in the UK, so it is difficult to judge its reputation.”

Looking at the company&#39s past performance Glover says: “Its investment style has not benefited from stockmarket conditions of the past couple of years, resulting in disappointing performance across the board.” Gibbon says: “Sarasin only has funds available in the UK. Three of those funds do not have a significant track record and the remaining two have below average returns over the last three years.”

Identifying likely competitors for the fund, Gibbon goes for Framlington health and NPI global care. Foster says: “Any other healthcare medical funds, such as Britannic global healthcare, First State global health & biotech and Schroder medical discovery. These funds are not theme funds, but will invest in the same sector.” Glover cites Framlington health and Schroder medical discovery.

Glover thinks the charges are fair and reasonable. Foster says: “The charges are standard for most UK Oeics, but some companies are scaling down their charges.” Gibbon says that although the charges would not deter him from investing, they could put off some clients.

Gibbon thinks the initial commission is standard, but points out it is lacking renewal commission. Foster and Glover think commission is standard.
Looking at the product literature Foster says: “It is good. Clear and simply presented on a double sided fact sheer, with a supplementary booklet explaining the investment themes in more detail. An additional booklet showing the charges houses the application form, which is presented in an easy to understand format.” Gibbon found the literature concise and informative.

Summing up, Gibbon says: “If Sarasin want to make a significant impact in the UK, I think it will need to improve its fund performance and reduce charges.”


Utopia Inns – Utopia Inns

Tuesday, 23 April 2002 Type: Enterprise investment schemes Aim: Growth by investing in leasehold bars and freehold pubs between Birmingham, Bristol and Reading Minimum investment: Lump sum £5,000 Opening-closing date: February 1, 2002-until further notice Charges: Implicit Commission: Initial 2.5% Tel: 01543 454947

Friends Provident cuts the cost of life cover

Friends Provident is making reductions in its term assurance rates of up to 15 per cent on products it sells exclusively through IFAs. New rates will apply to level term, decreasing term assurance and life cover in its Select Protection Plan. This means, for example, a female aged 30 non-smoker with a 25 year £150,000 […]

Point One widens range

Bankhall&#39s non-regulated network Point One is expanding its range of services to include healthcare.Point One, which provides support for mortgage, general insurance and non-regulated life products, has negotiated deals on income protection, private medical insurance and group risk schemes from a panel of providers comprising Bupa, Norwich Union Healthcare, Unum, Swiss Life, PPP and Standard […]

Divide and rule on &#39consultation&#39

The Orwellian plot line that is the CP121 consultation continues apace as organisations and businesses great and small make their submissions.Entering the debate with an appropriately political sense of timing, comes the Office of Fair Trading, with director general John Vickers endorsing the FSA plans. The OFT started the ball rolling in the first place […]

Embrace simplicity!

By Fiona Holmes, proposition communications manager When I first took out critical illness cover, I was overwhelmed. It wasn’t just the form filling, it was finding out about the sheer number of illnesses I was covered for. Did it give me peace of mind that I was covered for neuromyelitis optica or systematic lupus erythematosus? […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm