Aim: Growth and income by investing in a multi-asset portfolio
Minimum investment: Lump sum £1,000, monthly £100
Investment split: 55% equities, 20% bonds, 2.5% cash, 10% third party investment funds including listed hedge funds, 5% real estate, 7.5% derivatives
Isa link: Yes
Pep transfers: Yes
Charges: Initial up to 5%, annual 1%, performance fee 20%
Commission: Initial up to 3%, renewal 0.5%
Tel: 020 7038 7002
Sarasin Chiswell has brought out a Ucits III compliant version of its GlobalSar fund.
Introducing the fund Charter Devon Law principal Michael Posner says: “Changes to European legislation now permits the greater use of new types of instruments and sophisticated risk limitation strategies in regulated, collective funds. This has created an opportunity to launch the new fund, which is broadly based on Sarasin’s existing GlobalSar balanced fund. The object of the fund is to invest globally in a broad range of assets, using the now available plethora of financial instruments to hedge against downward pressures that will inevitably arise when markets take fright again. “
Posner points out that the intention is to produce a benchmark annual return in excess of 3.5 per cent over the Retail Price Index over a three-year period, with capital preservation. “The target asset allocation is 65 per cent in global equities, with the residue invested in bonds, cash, property, and a small percentage in derivatives. Over the long term the performance of the fund on which this is based has produced returns in excess of the FTSE All Share Index. The target rate of growth that it has set itself as a benchmark looks, on this evidence, to be achievable. Necessarily, there will be a reduction in the returns, owing to the cost of the hedge, but for the more nervous investor that is probably not a point of concern,” says Posner.
According to Posner, investors are becoming increasingly edgy about another bear market coming into play. “The majority realise that they need to invest in equities and that diversification is also key, but this offering is further seeking to cushion the downside risks by accessing the newly available financial instruments to this type of fund, “ he says. He feels the minimum investment levels are pitched relatively low, and the possibility of using Isa or Pep wrappers also incorporated. “There is a choice of accumulation or income shares, with distributions in the latter being made at the end of February and August,” he says.
Assessing the charges, Posner regards them as broadly in line with the market average. He also reviews the literature. “It contains all the required information, although it becomes apparent where the marketing department was thwarted by the compliance department, as some of the references are inordinately arcane – but that is now the fate of most industry publications,” he says. He adds that the product is well timed to the market and a useful addition to the armoury of portfolio funds seeking to give growth and security at the same time.
Switching his attention to the potential drawbacks of the fund Posner says: “There is nothing to object to in this offering, other than the usual concerns that always arise when a fund is hedged. It is our hope that the providers of the guarantees will not overstretch themselves – though only a fall in the markets will prove that the governance procedures in place will work.”
He believes competition will come from a number of protected funds on offer, from the likes of Axa, Friends Provident, Prudential, and Zurich, However, he notes these are not offering the same global strategy and diversification as Sarasin.
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average