Aim: Growth and income by investing in a concentrated portfolio of UK equities
Minimum investment Lump sum £1,000
Investment split: 100% in UK equities
Isa link: Yes
Pep transfers: Yes
Charges: Initial 5%, annual 1.5%
Commission: Initial 3%, renewal 0.5%
Tel: 020 7203 3329
Scottish Widows Investment Partnership has established a range of three absolute return funds, including Swip absolute return UK equity.
Introducing the fund, Independent Personal Financial Management Luke Gibbon says: “The absolute return UK equity fund aims to produce growth of 4 per cent above Libor by investing in a concentrated portfolio of UK equities, typically 25-35 stocks. It can use derivatives to enhance gains or limit losses so in theory it can make gains in a rising or falling market. However, the literature states that this is not guaranteed.”
Gibbon points out that the fund manager is Robert Waugh, who joined Scottish Widows in 2003. “While Scottish Widows UK Funds have performed well over the last year, in the two previous years they were below average,” says Gibbon.
Gibbon highlights the charges on the retail shares are 5 per cent initial and 1.5 per cent annual management fee, which he regards as fairly standard for this type of fund. “The commission is 3 per cent initial and 0.5 per cent renewal, which again is fairly standard,” he says.
Gibbon feels that for a new fund to be attractive, it needs to have something special such as a new investment approach, a top performing manager or an attractive charging structure. “While this fund may be interesting due to its concentrated portfolio and use of derivatives, I have seen nothing that really sets it apart,” says Gibbon. He says there are currently about 276 UK equity funds and 78 UK equity income funds to compete with Swip’s offering, he would be inclined to use funds with an established track record.”
Suitability to market: Average
Investment Strategy: Average
Advisor Remuneration: Average