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SVM plan adds up for kids

SVM Asset Management

SVM Savings Scheme For Children

Type: Investment trust savings plan

Aim: Growth by investing in the SVM global fund and/or SVM UK active fund

Minimum investment: Lump sum £200, £25 a month

Types of shares: Ordinary

Isa link: Yes

Pep transfers: Yes

Investment split: SVM global fund – specialist funds 38.3%, resources 18.5%, hedge funds 15.7%, property 13.4%, private equity 12.8% others 8.9%, SVM UK active fund – financials 40.6%, consumer 25.9%, resources 25%, industrial 9.4%, others 0.9%

Charges: Fund charges – SVM global fund – annual 0.65%, SVM UK active fund annual 0.75%

Commission: Initial up to 3%, renewal 0.5%

Tel: 0800 0199110

SVM Asset Management has made two of its investment trusts – the SVM global fund and SVM UK active fund – available through a savings scheme for children.

Hargreaves Lansdown investment research manager Ben Yearsley thinks SVM is a very good boutique fund manager that has launched some diverse, interesting products over the last few years. “It has some very interesting unit trusts, both in the UK and globally. It is strongly incentivised to produce top quartile and top quality performance. Colin McLean is the lead manager and major shareholder in SVM – in other words – he is tied to the business and is in little danger of leaving. He has a good long-term record for both himself and for recruiting quality managers. “

Looking at the product in more detail, Yearsley notes that having the ability to use the designated account or bare trust is a useful feature because it provides choice. “On the cost side, it is encouraging that there are no stockbroking charges, apart from a flat fee on sale. The literature looks fairly clear and informative as well,” he says.

Turning to the potential drawbacks of this product Yearsley notes there is a performance fee, which Hargreaves Lansdown does not generally like. However, he says that to be fair, the base annual management charge is pretty low. “I’m not convinced that investments trusts are as suitable as, say, unit trusts for a large majority of people. Aside from that, there no other real downsides to it but I personally would rather buy SVMs unit trust equivalents,” he says.

Scanning the market for possible competitors Yearsley says: “There are quite a few investment trust savings plans in existence – F&C and Witan spring to mind as heavily promoting regular savings. However, I think you have to look at the underlying funds and see what competition they have in both the investment trust and the unit trust world. In the investment trust world, RIT Capital Partners and British Empire Securities are possible contenders for regular monthly savings plans. Although it should be stressed that SVM’s global investment trust has very few, if any, direct competitors because of the diversity of its investments.”

Summing up, Yearsley says: The biggest problem I have with buying into the global fund is that it currently stands at a premium to NAV. Obviously if you are doing regularly monthly investing, then this should even out over time – but you may want to consider the unit trust equivalent where you know the price you pay.

“Aside from that, this is well worth considering for long term investing. With most child investing, not enough risk is taken – all too often mediocre funds are chosen, when in reality the time frame is generally long enough to warrant a higher risk fund choice. I think these funds therefore a very good long term savings plans for children – one of the key points of this new launch.”

He concludes that any investment should be bought for the quality of the investment management – not for any bells and whistles that may be attached to a product. On this front, he thinks investors in this SVM plan should have no worries, as it is a quality fund management company.


Suitability to market: Good
Investment strategy: Good
Charges: Good
Adviser remuneration: Average

Overall 8/10


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