Type: Unit trust under NURS
Aim: To achieve a total return from income and capital appreciation (please note that this is not an absolute return fund)
Minimum investment: Lump sum for retail £500 and institutional £50,000
Benchmark: 50% Iboxx All Stocks Gilts and 50% Iboxx All Stocks Corporates both in sterling
Isa link: Yes
Charges: Initial 4%, annual management charge 1.25%. Institution charge 0% initial and amc 0.6%
Commission: Retail 4% initial on Standard Life platforms, Fundzone and Sigma (will vary on other platforms) and 0.5% renewal. No commission payable on the institutional share class
Tel: 0845 60 60 062
Michael Both, proprietor of Michael Philips, says: “Sadly, I don’t think this is at all appropriate for clients right now.”
He says Standard Life Investments may well be relatively good at fixed interest investing but the fact remains, that in spite of interest rates falling to their lowest level for many generations, only two of its six other fixed interest funds made a profit since January 2008.
He feels that you “don’t need to be a genius” to work out that if interest rates are almost at zero it is only a matter of time before they rise. He says you will be informing clients of the massive risk of default in the short term and a racing certainty of capital losses when interest rates rise. “Somehow I don’t anticipate a lot of insistent clients wanting to pile in”, he says.
The fund has a flexible mandate and can include positions in derivatives including futures, inflation or interest rate swaps and credit default swaps, according to the Standard literature to further enhance returns and minimise risk. For Both, advisers will be only too aware that the FSA foists the full responsibility for peddling toxic products on them and not the manufacturers, and will not fail to highlight to investors that not a few economists believe interest rate swaps and credit default swaps were among the major causes of the credit crunch.
He says the product looks more like cynical marketing than a genuine effort to enrich investors.
Suitability to market: Poor
Investment strategy: Poor
Adviser remuneration: Average