Aim: To achieve a total return through investing in a highly diversified asset structure where the maximum exposure to equities is limited to 60% of the value of the fund’s portfolio
Minimum investment: Lump sum £1,00 and subsequent £200
Isa link: Yes
Charges: Initial 5.25%, annual 1.4%
Commission: Initial up to 5.25% and/ renewal 0.5%
Tel: 0800 0199 110
The fund aims for a highly diversified portfolio of assets with maximum 60 per cent exposure to equities.
It will invest primarily in investment trusts and units in collective investment schemes (which in turn may invest in alternative assets such as private equity, property and hedge funds) and other transferable securities. The remainder of the fund will be invested in bonds, cash, deposits and money market instruments.
Michael Philips proprietor Michael Both says: “Who could object to the fund’s stated objective”. However, he feels that the investment remit and assets, which it may invest in, are so broad that in effect investors are in a discretionary managed fund or possibly a FAIF (funds of alternative investment funds). As such investors “will not easily be able to predict how the mangers will use their discretionary mandate.”
Competitors to the SVM fund are Cazenove multi-manager diversified or JPM cautious total return.
Both objects to the phrase total return, contained within the SVM Cautious Managed funds aim, as he believes the FSA should be as protective of it as they are of the word guaranteed.
In the minds of many investors, total return means the value will never fall (by much) over time periods of a year or more and will deliver positive returns in all market conditions. For Both, from the rest of the documentation this is “clearly not what SVM is proposing and there is significant danger that investors will end up with something inappropriate.”
According to SVM’s literature, the fund lost 28.9 per cent in the seven months from launch on May 15, 2008 to December 31. He says: “I can’t think of any cautious investor who would be happy with that as a total return.”
He believes advisers should have at the forefront of their minds that the FSA puts the entire responsibility for these (and all other Ucits III) products on adviser even though they are well aware that the marketing from the product providers aimed at advisers “suggests they will be much lower risk than is in fact the case”.
Both says if there are any doubts on this point, advisers just need to read FSA consultation papers on Funds of Alternative Investment Funds (FAIFS) and Treating Customers Fairly.
Suitability to market: Poor
Investment strategy: Poor
Adviser remuneration: Average