Royal & Sun Alliance Investment's European prime fund is an Oeic that aims for growth by investing in 30 pan-European stocks.
Looking at how well the fund fits into the market, Mil- ton says: “It fits in fine. It is one of a renewed theme to try to counter quasi-tracking and benchmarking, although these are decisions most investors would think were being pursued for them anyway.”
Wright says: “It may not be a good time to launch an aggressive fund but this will attract those investors who are prepared to buck the trend and have a go.”
Walker says: “This continues the trend for concentrated funds which has gathered pace this year. There is already a good range of European funds to choose from on the market.”
Smith says: “It fits firmly into the niche category reserved for clients who are looking for a bit of excitement.”
Turning to the type of client that it is suitable for, Walker says: “It is for the more experienced client prepared to accept higher volatility. This could ideally build upon existing European exposure but should not be a first step into Europe.”
Smith says: “This is suitable for sophisticated investors prepared to take above-average risk with a proportion of their capital. It can be for those with a very long-term outlook and is perhaps suitable as an investment for children.”
Wright says: “Europe is now almost a home market and it should fit most people, at least for a little of their available cash.”
Milton thinks it should be suitable for any client as a part of their Continental exposure.
Moving on to the marketing opportunities that the panel consider that the product will provide, Smith says: “In the present economic climate, the vast majority of clients are looking to reduce risk so this fund will not be appropriate.
“However, once the economy improves the fund should appeal to those looking to make quick gains, so there will be some opportunity to market it to higher-risk clients.”
Milton says: “We prefer investment trusts at present because of some serious discounts to net asset value, so this fund is limited for us. It is otherwise attractive.”
Wright says: “As the Isa season approaches, the fund will be giving a little more breadth to most IFA recommendations.”
Walker thinks that any marketing opportunities are now fairly limited after the events of September 11.
Evaluating the strong points of the fund, Milton says: “This is a sensible and saleable idea based on a focused portfolio.”
Walker says: “The fund manager has started to establish a sound track record in her own right. Launched as both an Oeic and an Isa, the fund will serve well in tax advice terms.
“It has a good brand name and an acceptable market in Europe. It should also invest in companies that people have heard of. The selector feature is fairly unusual, providing scope for withdrawals on a regular basis.”
Smith says: “The strongest point must be the track record of the fund manager and her team, suggesting she will also have success with this fund. The focus on a limited number of stocks will also help to remove a non-performing tail of stocks.”
Moving on to the disadvantages of the fund, Walker says: “Stock selection will be a crucial factor. Although the fund manager's track record is above average it is not outstanding.”
Smith says: “The only real disadvantage is the ability to underperform if the stock selection is poor. In addition, hidden charges could be above average as stock turn-over is predicted to be high, leading to high trading costs.”
Wright says: “I would expect to attract small amounts of investment at this time as clients are looking for safe havens at the moment.”
Milton says: “This could prove to be higher risk in that, just because a theory sounds good, it does not mean the stocks go up.
“If a bad hit arises it is also likely to affect new fund flows, as the buyer's obsession with performance fails to acknowledge or forgive one bad investment or two – despite best endeavours. Who forecast Railtrack? Overnight, the value of Railtrack shares became worthless.”
Looking at the investment strategy, Wright thinks this is an exciting prospect that looks good.
Walker regards the strategy as being fine as long as the client is aware of its concentrated nature.
Milton says: “The strategy makes sound sense, as does the concept of concentration upon one's beliefs rather than index-matching.”
Smith says: “The concentration is on best-of-breed stock selection, which is great as long as they get the calls right. A few poor stock selections will hit the fund for six but is to be expected in a fund of this type.”
The panel has mixed opinions about the reputation of Royal & Sun Alliance Investments. Wright thinks it is quite good but Walker regards it as mixed.
Smith says: “Unfortunately Royal & Sun Alliance is not widely regarded as an investment house despite its excellent track record and a clutch of awards. It needs to do further marketing to raise awareness among IFAs.”
Milton says: “It has a fine reputation which is becoming better as the merger is further behind. There are a few problems on the with-profits front.”
Moving on to the charges Smith says: “The fund will require very active management. Therefore, the charges are both fair and reasonable as they are no higher than those charged by many less actively managed funds.”
Wright and Milton think the charges are fair and reasonable while Walker says: “The annual charges are in line with the market but the initial charges are on the high side.” The panel regards the commission as being fair and reasonable.
Looking at the product literature, Milton regards this as being fine, acceptable and clear.
Wright thinks the literature is very good while Walker says it is acceptable and reasonable.
Smith says: “The literature is clear and concise with a good explanation of the investment process and the higher risks involved.
“It is a shame that monthly savings have not been included automatically – a fund such as this is an obvious candidate for the benefits of pound-cost averaging.”
Wright says: “I think the fund will do quite well and could grow to be a major fund once confidence returns to the market.”
Smith says: “With the record of Royal & Sun Alliance this fund should perform well but is likely to be ignored by many short-sighted IFAs as it does not come from an 'investment house'.”
Finally, Milton says: “This is a good addition to the marketplace but is the concentrated theme just dressing up the recipe of already successful managers and funds?”