Type: Unit trust
Aim: Growth by investing long in a multi-asset portfolio comprising equities, fixed interest, commodities, currencies and investing short through derivatives
Minimum investment: Lump sum £1,000, monthly £50
Investment split: 25% UK equities, 25% currencies, 20% short UK and US Government bonds, 10% global equities, 7% gold, 5% short equities, 5% corporate bonds, 4% agriculture, 3% platinum, 1% silver, 45% cash
Isa link: Yes
Charges: Initial 5.25%, annual 1.5%
Commission: Initial 3%, renewal 0.5%
Tel: 0800 092 20900
Strategic assets is the first new fund from Artemis in four years and as a multi-asset fund structured under Ucits III, it can move between equities, commodities, fixed interest and currencies as market conditions change. It can also create short positions using derivatives.
Looking at the positive features of the fund Morgans Independent Advisers director Martin Dilke-Wing says: “It comes from a well respected investment management house that has been very quiet lately. The strategy appears to be very sound given current uncertainty surrounding markets but ultimately the evidence as to whether it is a useful fund will be generated entirely by its performance.”
Dilke-Wing believes the fund has been designed to compete with funds that focus on total returns and he notes that over the last year there has been an enormous disparity in the returns achieved by the best and worst performing total return funds.
“The literature is clear and concise. I would imagine that the marketing campaign will ensure that there is a significant amount of investor interest in the fund,” says Dilke-Wing. He adds that the charges appear to be very fair and competitive, particularly when compared with the traditional hedge fund market, which he sees as another area in which the Artemis fund will compete. “The adviser remuneration is pretty much what you would expect,” he says.
Turning to the potential drawbacks of the fund, Dilke-Wing says: “The problem with all funds like this is that effectively you trust the manager completely to get the calls right about which asset classes to be invested into, long or short.
“It is not possible to include the fund in a portfolio for asset allocation purposes because you don’t know where the fund is going to be invested at any one particular time and therefore advisers who specialise in asset allocation for clients are likely to use it as a peripheral rather than a core holding,” says Dilke-Wing.
Having said that, Dilke-Wing says that you know what you are getting into when you subscribe to the fund and if you are not happy with the fact that the manager has pretty much carte blanche to invest where he likes, you should not be in it.
Dilke-Wing reiterates his view that the main competition is going to be provided by funds of hedge funds and total return strategies. “Artemis makes a marketing play about the fact that its offering is unique, but while it may offer a few bells and whistles that are not generally available in a single offering from a traditional UK retail investment house, this is more marketing than anything else,” he says.
Summing up Dilke-Wing says: “The fund is very interesting given concerns as to whether the rally in equity markets is sustainable and given the level of doubts over the fixed interest market. Unfortunately, experience of the last year has shown that many so called market neutral or non-correlated investment strategies, tend to look anything but market neutral.”
Dilke-Wing has a high degree of scepticism about the ability of fund managers to get currency calls right, along with the right balance and timing for long/short calls and weightings in equities, bonds and commodities. He concludes: “I will be keeping a close eye on performance and if it is strong, the fund could be a very useful addition to the adviser’s range.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average