North American Fund
Type: Unit trust.
Aim: Growth by investing in North American companies.
Minimum investment: Lump sum £1,000, monthly £25.
Investment split: 100 per cent in North America.
Isa link: Yes.
Pep transfers: Yes.
Charges: Initial 5.25 per cent, annual 1.5 per cent.
Commission: Initial 3 per cent, renewal 1.5 per cent for Isa and Pep transfers only.
Tel: 0800 718777.
Julie Darlington, Product and provider manager, DBS Financial Management
Lee Coates, Director, Ethical Investor Group
Terry Stevens, Proprietor, Centre Financial Services
Malcolm Hooper, Partner, Independent Financial Advisory Services
Suitability to market: 7.5
Investment strategy: 7.8
Past performance: 5.8
Company's reputation: 6.8
Product literature: 6.0
The North American fund from Schroders is a new unit trust that invests solely in North American companies.
Looking at how the fund fits into the market, Darlington says: “The fund will fit into the sector alongside the existing range of US funds, and complements Schroders' existing US funds. A number of reputable investment houses already offer some good funds in this sector, so competition will be strong.”
Hooper feels that the fund should offer a good if not speculative investment, while Stevens says: “There are over 80 North American funds currently available, plus the smaller companies sector, so there is a good range of funds to choose from. However, there are not too many new launches, so this one is welcome albeit brave.”
Coates feels that the launch of a new North American fund is hardly an original concept, but the Schroders name makes it a little more interesting.
Turning to the type of client the fund may be suitable for, Hooper says: “The more speculative client.”
Darlington feels it will appeal to clients willing to invest over the medium to long term, who are prepared to accept some risk to capital, whilst looking for a growth portfolio.
Coates says: “It is more suited to an average, rather than sophisticated investor. First time investors may not appreciate the lack of track record though.”
Stevens also mentions that it will appeal to a more experienced investor who can take a risk. He also mentions clients that have substantial European and UK holdings who have confidence in the US economy.
The panel has a difference of opinion when asked about the marketing opportunities provided by the product. Stevens does not think it will provide any opportunities.
Coates says it will provide little opportunity until the markets settle down, while Darlington says: “A Pep transfer plan with no initial charge provides a marketing opportunity for advisers with clients who have little or no exposure to America within their portfolio.”
Hooper says: “In this particularly depressing time for investment and the lack of improving signals in the UK and Europe, it should offer a good alternative.”
Turning to the main useful features and strong points of the product, Hooper says: “The fund management team, having spent 62 years managing North American equities.”
Coates also picks up on the pedigree of the fund managers, saying that this clearly makes a difference, while Darlington says: “Schroders believes it can maximise the opportunities presented by the current US market because low share prices present some exciting buying opportunities.”
Stevens lists the availability of mini and maxi Isas, Pep transfer eligibility, and a good range of options.
Moving on to the panel's view of the investment strategy of the fund, Coates says: “Freedom with a strict control range. Sounds like tying one hand behind the back.”
Darlington feels that Schroders is taking a positive view of the US market, but still holds what some would class as defensive stock in the form of pharmaceuticals and financials.