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Skandia blends best ideas

Skandia Investment Management has launched a UK best ideas fund, the second in its best ideas range.

The fund follows the launch of the global best ideas fund in June and adopts the same investment strategy of employing 10 fund managers from different groups to choose their 10 best stock ideas.

The UK best ideas fund will include stocks selected by managers such as Rathbones’ Carl Stick, New Star’s Stephen Whittaker and Axa Framlington’s Roger Whiteoak. Five of the 10 managers already run the UK element of the global best ideas fund.

The managers, who each have different styles, will have the freedom to invest wherever they want to without benchmark constraints and will be encouraged to back up their convictions, as they will be able to hold up to 25 per cent in a single stock. They must also hold at least 5 per cent in each stock to ensure that all holdings will contribute to the overall returns.

Some of the managers will have a short-term outlook, trading the portfolio heavily to exploit short-term trends. Others will buy and hold for the longer term, looking for companies they regard as undervalued. Similar, some managers will focus on large caps while others may explore smaller companies, including those listed on Aim.

The initial line up of managers were chosen for the long-term on the basis of thei stockpicking skills and the way their approaches can be blended together within a single portfolio. However, Skandia will constantly monitor them and could replace them if deemed necessary.

In some respects Skandia’s best ideas approach is a halfway house between a concentrated portfolio and a larger portfolio. While it is similar to a concentrated portfolio in that each manager is limited to 10 stocks for their particular style, leaving no room for passengers in their stock selection, the overall portfolio contains 100 stocks, which is broader than a concentrated single manager portfolio.

However, each manager is running only 10 per cent of the fund, so unless they take large positions in some stocks, their impact on the overall returns may be diluted.

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