Close Fund Management's FTSE Euro eTX fund is an Oeic that tracks the FTSE eTX Euro 50 index comprising 50 small to medium-sized European technology companies.
Examining how the fund fits into the market, Parvaneh says: “There has been a gap for a pure Euro tech fund so far. This will fit very well.”
Dilke-Wing says: “This fund occupies a unique niche, particularly bec ause of its passive management technique.”
MacFarlane says: “The fund fits well into Close Fund Management's range of funds and will sit comfortably in a market which, it seems, cannot get enough of technology-related launches.”
Identifying the types of clients for whom the fund is suitable, MacFarlane says: “Clients who are prepared to accept volatility and take a longer-term view should find this fund rewarding, as well as those clients wanting exposure to Euro-denominated stocks – in a nutshell, higher-risk clients.”
Parvaneh suggests adventurous clients who like a lot of risk. Dilke-Wing says: “By its very nature, this fund would only be suitable for aggressive risk-embracing investors or as a small component of a widely diversified portfolio. The fund is also useful compared with other technology funds that do not permit Pep transfers.”
Bloom thinks the fund is suit able for asset allocation adj ust ment in segregated portfolios.
Assessing the marketing opportunities the fund is likely to offer, Bloom says: “It is good for specialist managers of investment portfolios.”
MacFarlane says: “The timing of the fund launch with the recent technology correction should provide buying opportunities for shrewd inv estors. The Isa wrapper will help the fund sell as we move towards the Isa season.”
g says: “The fund will not provide any specific marketing opportunities bec ause it is a specialised fund and probably not suitable for mass marketing.” But he suggests Pep managers may find the fund useful.
Moving on to the main useful features and strong points of the product, MacFarlane says: “It provides exposure to the European smaller-cap tech nology market by tracking the FTSE eTX Euro 50 index. The portfolio will be diversified, reducing the overall risk. It is cost-competitive and Isa-able.”
Dilke-Wing says: “It provides access to a selected sector of stocks that is not avail able in a directly comparable form in any other packaged product. The Pep transfer option is also very useful.”
Bloom says: “It covers indexation of very immature European technology stocks. It also saves on very expensive and difficult stock analysis in an emerging sector of a zone which has yet fully to embrace an equity culture.”
Parvaneh thinks that as a fund breaking new ground, it must be closely watched.
Discussing the investment strategy, Bloom says: “It covers all European technology indices except the UK. It is a natural arrangement considering the variation in fund management expertise in London and on the Continent.”
Parvaneh and Dilke-Wing point out that the only strategy is to track an index.
MacFarlane says: “Close Fund Management's strategy to replicate the FTSE eTX Euro 50 index with this fund sits com fortably with its existing stable of funds. Investors need to be made aware of the limited global diversity of this fund.”
Identifying the disadvantages of the fund, Parvaneh says: “Being a tracker fund, it will not be able to benefit from stock-picking opportunities.”
Dilke-Wing says: “The man agers are constrained by the limits of the stocks held in the index. If the sector looks ropy, the manager will not have any discretion to go into cash. Similarly, if opportunities arise in unrelated areas such as healthcare, it may be that the fund cannot take advantage.”
Bloom says: “It is strategically dangerous to restrict tech nology investment to mainland Eur ope. It is not exactly a zone recognised for small companies' entrepreneurial flair. Also, the curr ency risk with euros is now plain to see for even the most hidebound Europhile.”
MacFarlane says: “This fund has few disadvantages. However, investors will need to be aware of the niche market nature of the fund. Expo sure is limited strictly to the European smaller-cap technology stocks and the unloved euro currency. The fund will not provide exposure to the US technology market that is generally considered the driving force of the new economy.”
Assessing the reputation of Close Fund Management, the majority of the panel are positive. Bloom says: “It has a first-class reputation in its many fields of endeavour and this will be no exception.”
Dilke-Wing thinks Close has a very good reputation for managing this type of fund. MacFarlane says: “It is excellent at what it does. It is an innovator in derivative and index funds.”
Parvaneh is out on a limb. He says: “It is fairly average. I think more PR is needed to get it across to the IFA market.”
Moving on to the company's past performance, Dilke-Wing says: “Given the fact that most of its funds tend to be index-related or in corporate guaran tees, it is not a traditional management group to app raise. Within the boundaries of what it does, its performance is acc eptable.” Bloom thinks it is strong in the very limited fields in which it plays.
MacFarlane says: “Past performance has been good, ach ieving in most cases what the company has set out to do, with a high deg ree of correlation to the chosen indices.”
Asked to identify pot ential competitors to the fund, Par va neh and Dilke-Wing cite Aberdeen European tech no logy. MacFarlane suggests actively managed European technology funds such as those from Schroder and Aberdeen.
Bloom says there are very few competitors at the mom ent but suggests this fund launch will trigger several more.
The panel are split over the level of charges. Bloom and MacFarlane think they are fair and reasonable but Parvaneh and Dilke-Wing believe they are expensive for a tracker fund.
The panel agree the commission is fair and reasonable but Parvaneh points out that this is reflected in the high initial charge.
The panel are impressed with the product literature on the whole. Dilke-Wing says: “It is very good, very comprehen sive and direct, not patronising, over-simplistic or burdened with marketing speak.”
MacFarlane finds it concise, easy to read and easy to understand. Bloom thinks it is good but Parvaneh complains that it is not interesting enough.
Summing up, Bloom says: “Over the last few years, there has been indiscriminate buying of technology stocks and, recently, indiscriminate selling. Indexation in any form is indiscriminate, which is why we do not like it. We feel the way forward is for even more res earch and analysis of technol ogy companies on a global scale.”