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SocGen Looks to corporate bonds

Meadows says: "The fund only pays a quarterly income. Surely if you want to stand out from the crowd you should try and be different. Go on, try monthly, or is SocGen making a fanfare but offering something that is little different from the rest of the market?"

Rawnsley says: "The drawbacks include a possible loss of capital and the uncertainty for the target marketplace as it strives for high income."

The panel has mixed views on the investment strategy. Callaway thinks that it is not inspired and very middle of the road, while Rawnsley says: "It is sound in the current environment but is slightly uninspiring."

Meadows says: "A corporate bond fund is a corporate bond fund. All clients and advisers alike are only interested in the income delivery."

However Bulgin says: "There is a good spread of risk grades in sterling denominated bond funds. The bulk of funds are ‘A’ graded or above."

Moving on to the reputation of SocGen asset management, Rawnsley says: "It has good sound performances, but not enough historic background. The marketing of its name is not strong enough either."

Callaway says: "It has developed a very good reputation over such a short period of time."

Bulgin says: "SocGen Asset Management is a relatively new player with little in the way of a long term track record on the fixed interest sector."

Meadows says: "I am not a great respecter of reputations. Fund managers get paid very well to deliver the goods. If they deliver the income, then isn’t that what this product is supposed to do?"

Focussing on the issue of if the charges are fair and reasonable, Rawnsley says: "The bid/offer charges are fair, while the annual charge is off the mark a bit."

Meadows says: "In an industry that it hung up on charges, when are we going to learn to get the message through that no-one does anything for free? At the end of the day does the client really care what the charges are if the fund does what it is supposed to. 3.5 per cent initial and 1.25 per cent annual are not the cheapest."

Callaway comments: "For an equity fund the charges are fair and reasonable, but not for a corporate bond fund where about 40 per cent of the assets are in zero bond holdings. Does it really cost £332.50 out of a £7,000 investment in year one to run such a fund?"

The panel again disagrees on the product literature. Meadows says: "Once you get over the shock of all those smug-faced fund manager passport photos, the actual layout of the literature is quite clear. However the actual key features and terms and conditions are maybe slightly off-putting to the older fraternity in terms of the amount and the print size – they’ll need their reading glasses."

Callaway says: "The literature is a bit bland. Also I am not keen on blood read writing in literature. It looks like Freddy Kruger from A Nightmare in Elm Street wrote the brochure."

Rawnsley says: "It is in plain English and is easy to understand and use. However it is very bland." Bulgin says: "The literature is very good and is easy to read with comprehensive information included in it."

In conclusion, Callaway says: "I do not think that this fund offers anything new to the Isa or investment universe. I think that it is more of a gap filler for the SocGen range of funds."

Meadows says: "First, change the front cover and second why bother with a monthly ratings option? It is all very well explaining what corporate bonds are and convertible bonds and how good they can be, but I did not see the note about what happens if one of the holdings fails to repay…"

Finally Bulgin says: "The fund is well presented but SocGen does not have much of a track record in this area other than with the UK gilt fund, which has a Micropal four-star rating."

Bruce Bulgin, Partner, Chadney Bulgin, Stephen Meadows, Consultant, Ashgates Accountants, Roland Callaway, Director, Callaway & Sons, Paul Rawnsley, Practice manager, Courts Independent Financial Management.

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SocGen Looks to corporate bonds

SOCGEN ASSET MANAGEMENTCorporate Bond FundType: Unit trust.Aim: Income by investing in corporate bonds.Minimum investment: Lump sum £1,000, monthly £50.Investment split: High-grade sterling-denominated corporate bonds 80 per cent, fund manager&#39s discretion 20 per cent.Yield: 5.5 per cent.Isa link: Yes.Pep transfers: Yes.Charges: Initial 3.5 per cent, annual 1.25 per cent.Commission: Initial 3 per cent, renewal 0.5 per […]

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