STANDARD BANK OFFSHORE
CONSERVATIVE STRATEGIST FUND
Type: Fund of funds.
Aim: Growth by investing in bonds and equities.
Minimum investment: £10,000/$15,000.
Place of registration: Jersey.
Investment split: Equities 30 per cent, bonds 50 per cent,
cash/currency funds 20 per cent.
Isa link: No.
Charges: Initial up to 5.5 per cent, annual 1.5 per cent.
Commission: Initial up to 4.5 per cent, renewal up to 0.5 per cent.
Tel: 01534 881281.
The panel: Daniela Glover, Independent financial adviser, Stephens
Nigel Chapman, Fund manager, James Brearley & Sons,
Mark Dampier, Head of research, Hargreaves Lansdown.
Suitability to market 4.0
Investment strategy 4.5
Company's reputation 5.0
Product literature 4.0
Standard Bank Offshore's conservative strategist fund is a
Jersey-based fund of funds that aims to produce capital growth by
investing in equities and bonds. It is one of three funds in the
strategist range and is denominated in sterling or dollars.
Looking at how the fund will fit into the market Glover says: “This type
of product is becoming more popular as clients look to access more
than one fund manager through one wrapper. There are not too many
providers offshore at present which offer multi-manager products, so
this is a potentially useful addition.” Chapman says: “For an offshore
client wishing to have his or her money managed in this fashion, then
it certainly fits the bill.” Dampier says: “This would fit somewhere
between an international bond and a portfolio management service.”
Identifying the type of client for to whom the fund may appeal Dampier
says: “This would appear suitable for UK ex-pats who wish to have a
managed fund, but with three different strategies.” Chapman thinks it
is suitable for offshore clients. Glover agrees, but she has a more
specific kind of investor in mind. She suggests the smaller offshore
investor looking for the greater diversification than the amount of their
investment will allow.
Turning to the fund's marketing potential on the whole the panel feel
this is limited. Chapman believes it offers no new opportunities.
Glover says: “Brokers with South African clients will be interested in
the product. Potential investors are likely to be South African because
there is a section in the literature for South African investors.”
Dampier says: “There are very few opportunities other than for
investors who do not wish to make any decisions themselves.”
Considering the main strong points of the product Chapman goes for
the conservative strategy, which sits alongside the aggressive and
balanced strategies. He also mentions the product's use of the fund
of funds concept.
Glover points to the fund's ability to access a range of product
providers through one wrapper, but complains that there is no
indication as to which ones and only very limited information on the
selection process. She also likes the continuous monitoring of the
underlying funds by Standard Bank stockbrokers and the ability to
invest in sterling or dollars, which could make it attractive for many
Dampier finds very few useful features. He mentions the asset
management across other groups, but agrees with Glover in that
information on the external fund managers is lacking.
Moving on to the drawbacks of the product the panel agree that the
cost of the product is the main issue. Chapman says: “The 1.5 per
cent annual management fee on top of the underlying management
companies' own annual charge is excessive. Numerous higher
profile fund management houses offer similar or better facilities.”
Glover says: “There are additional fees for the fund of funds wrapper.
Name awareness could be a problem as there is potential confusion
with Standard Life for UK investors.” Dampier says: “The double
charges which appear to make the annual management charge
closer to 3 per cent.”
Discussing the flexibility of the fund the panel are critical. Glover says:
“There is one free switch per year to another class of shares.
However, there is no income facility.” Dampier says: “Switching
between three managed funds hardly shows great flexibility. And
there is only one free switch a year.” Chapman says: “Being able to
switch between the fund is normal practice. Only having two other
strategies is somewhat limiting.”
The panel struggle to assess the reputation of Standard Bank
Offshore. Chapman says: “Other than the investment arm of Standard
Bank, it has no reputation in asset management.” Dampier says:
“Frankly, I know very little about it.” Glover says: “It is relatively
unknown by the general public.”
The panel have a similar problem when trying to review the
company's past performance. Chapman points out that there is very
little information to asses past performance. Dampier says: “I have
no idea what the performance is, nor have I ever met anyone from the
company, let alone a fund manager.” Glover says past performance
is not known.
Identifying rival products Glover goes for Rothschild Asset
Management's Five Arrows International wealth management
service. Chapman suggests most offshore umbrella funds. Dampier
says: “Probably other managed funds, although this is generally a
very risky sector.”
The panel are split when reviewing the charges. Chapman thinks the
charges are high and Dampier agrees that they are too expensive.
But Glover thinks they are standard for this type of product.
Considering whether the commission is reasonable Chapman
thinks it is fair and Dampier thinks it is standard. Glover complains
that the product literature is vague in this respect. She says: “It just
says commission and incentives may be paid but the exact amounts
The panel agree the product literature could have been better.
Chapman thinks it is quite staid. Glover says: “It is dull, old-fashioned
and not targeted at the investor. It was also very uninformative as
there was no information on asset allocation or underlying funds.”
Dampier says: “It is poor with very little real detail. It is all talk.”
Summing up, Glover says: “It is unlikely to make much of an impact
for the UK investor.” Dampier concludes: “I believe this is an
expensive, unnecessary product. Clients would do better to buy the
Foreign & Colonial investment trust.”