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Track-seat driver

Barclays Global Investors has introduced the BGI Multinational fund to


track the FTSE Global 100 index, which comprises 100 of the world&#39s leading


companies.


The panelists agree that the fund fits into the market well. Macfarlane


says: “The fund fits well into the index-tracking stable of funds currently


offered by many compan ies. It is better than many of the traditional


tracker funds on offer as it provides a more global investment spread.”


Flemming says: “This fits in well to what has been a niche market and


which is now growing.”


Buswell takes a more cautious view. He says: “This is yet another tracker


fund. First it was the FTSE, then the New York stock exchange, then a


combination, then the Eurostoxx and now we have the multinational tracker.


Unfortunately, it is so heavily weighted towards the US that I am not sure


it will do what it is supposed to do.”


Looking at the types of client for whom the fund is suitable, Bruce says:


“This is for clients who perhaps have experience of investing in the UK but


who have not yet ventured overseas. This product would be a good first-time


international fund for such an investor.”


Macfarlane says: “This is for clients who are looking for global exposure


to a portfolio of the world&#39s biggest and most successful companies. It


could also be for first-time investors or as a core holding within bigger


portfolios.”


Flemming says: “This could be for a safety-conscious client who wants to


get involved in the international market, perhaps for the first time.”


Buswell thinks this fund is suitable for investors who do not have a


global fund within their portfolio.


Turning to the marketing opportunities that the product provides,


Macfarlane says: “This fund will be an attractive holding in many


portfolios and should be especially attractive as an Isa-wrapped fund. Many


clients will be familiar with household names within the fund such as


Microsoft and Coca-Cola.”


Bruce says: “This is suitable for most types of investors. It is a


well-presented fund with low charges.”


Buswell says: “This may capture the imagination of the investor who wants


to say: &#39My money is invested in the world&#39s top 100 companies.&#39 Quite why


he would want to say that is beyond me but someone undoubtedly will.”


Looking at the fund&#39s strong points, Macfarlane says: “The fund, while


passive from a management point of view, should nevertheless be dynamic. As


tomorrow&#39s leading companies move into the Global 100 index, those whose


days are done are replaced. The fund has the Isa wrapper, competitive


charges and provides for global diversification.”


Flemming says: “Its main useful point is its breadth of scope, covering


different companies in different areas, so it is not limited to just the


one spot in the market as narrower funds are.”


Bruce says: “The fund has removed the risk from companies that are truly


international and are not tied to any one economy. It also has a good


geographical spread and lower initial and annual charges than some funds.”


Turning to the drawbacks of the fund, Buswell says: “This is a rapidly


changing world. Probably 10 of the companies mentioned in the literature


are no longer in the top 100. Then, of course, there are mergers and


acquisitions constantly taking place within these companies.


“Also, the fund is so heavily weighted in the US that, should a major


correction in the market take place, it would have an almost uniform effect


on all the other companies whose principal market is the US.”


Flemming says: “Its one drawback is the potential volatility of the


international markets. We only have to remember what happened to Japan and


the Far East a few years ago and the effect that that had on the market.”


Bruce says: “It is restricted to FTSE Global 100 companies. As most of


these have already made it to the top, further outperformance may be


restricted.”


Macfarlane points out that clients would have to be aware of possible


currency risks due to the geographical spread.


Commenting on the investment strategy of the fund, Macfarlane says: “The


fund is passive, with the investment strategy being determined by the


capitalisation of the world&#39s biggest multinationals.”


Buswell says: “Basically, there is no strategy. Barclays, like many other


companies before it, is relying on the expertise or investment strategy of


the individual companies rather than its own strategy.”


Bruce says: “The strategy may not suit everyone but, by only investing in


big multinational household names, risk may be reduced. However, the upside


may also be restricted by only investing in companies that have already


made it.”


The panel are divided in their opinions of the company&#39s reputation. Bruce


and Flemming have not had a lot of experience with BGI and are unable to


comment but Macfarlane regards the company as having an excellent


reputation. Buswell says: “BGI has a solid if unspectacular reputation.”


Commenting on BGI&#39s past performance,Buswell says: “To be frank, this is


not particularly inspiring. I wish that banks would stick to banking and


leave investing to investment companies.”


However, Macfarlane says: “Its investment past performance record is above


average across many funds.”


Looking at the main competition to the fund, Macfarlane points to the


Mercury Global Titans fund.


Buswell says: “Most of the major investment companies have global funds


which consistently outperform most of the banks. I cannot see people being


drawn away from those companies with proven track records to go with this


particular fund instead.”


The panel agree that the charges and the commission are fair and reasonable.


All the panelists regard the product literature as attractive. Flemming


says: “It is easy to read, simple and easy to understand.” Bruce comments


that it is clear, easy to follow and user friendly.


Buswell says: “Actually, for a bank, it is clear, concise and easily


understandable.”


Buswell sums up by saying: “Perhaps I am thinking the unthinkable here but


I do wish that banks would stick to banking, investment companies to


investing, building societies to savings and mortgages and insurance


companies to insurance.


“The one-size-fits-all scenario that everyone seems to be attempting is


only succeeding in producing small number of very large but very aver age


companies.”



Broker Panel


Alan Buswell, Proprietor, Glenburn Financial Services,


John Bruce, Partner, Gillies and Campbell Independent Financial Advisers,


Bruce Macfarlane, Partner, Capital Trust Financial Management,


Derry Flemming, Derry Flemming Consultants

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