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Schroder chief tells IFAs to warn on recovery risk

IFAs must avoid misselling by making clients fully aware of the risks in investing in the new Schroder recovery fund, says manager Ben Whitmore.

He urges advisers to warn clients of the volatility of his fund that opened for retail investors this week.

The 293.6m Schroder recovery fund has been run as an institutional fund since its launch in 1970. It is down by 2 per cent over three months, but has returned 18 per cent over one year, 17.9 per cent over three years and 10 per cent over five years.

Whitmore emphasises that investment has to be long term since the fund, by its objective of achieving string capital growth in companies that have suffered a setback, is higher risk.

The fund holds 60 to 90 stocks and never more than 4 per cent of one stock or more than 15 per cent in any one sector. The fund is cautious on firms dependent on consumer demand, including consumer-oriented banks, and has reduced exposure to property stocks.

Whitmore says: “The relative volatility of the fund is going to be high. There are going to be times where we underperform in the short term. If you do not mention that up front you would be misselling the product. You need to explain the characteristics of the fund and the disadvantages.People do have a lot of confidence in the managers they select. You have to have that trust. The response that we have had since going independent has been positive.”


£795k cost of BBB failed merger

Berkeley Berry Birch spent £795,000 on adviser fees for its failed merger with Inter-Alliance. The figure appears in its interim results for the year to March 31. The merger was announced in January but fell apart in May.


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