the north america equity fund will now be marketed as a US core product with a blend style
Investec's forthcoming North American equity fund is to be marketed as a core US product, an area of the market the group believes to be under-represented.
As exclusively previewed in Investment Midweek, Investment Week's electronic sister paper, the fund, which launches on 23 September, is to be run by US-based asset manager Thornburg.
Investec already outsources management of its European fund to Albert Morillo of BlackRock.
Investec's fund will be a mirror of Thornburg's $1.6bn Value Fund, which David Aird, joint managing director of Investec, said is deceptively named as it is designed as a blend portfolio.
It will carry a 4.5% initial charge and a 1.5% annual management fee, there is initial commission of 3% and a renewal of 1.5%. The minimum investment is £1,000 lump sum or £100 per month.
The fund has the objective of outperforming the S&P 500 through a large cap blend with low volatility, in a concentrated portfolio of 35-45 stocks.
The portfolio of the fund will be broken into three segments: about 40% will be in basic value stocks, 40% will be invested in consistent earner stocks, and up to 25% will be invested in emerging franchises.
Aird said the fund will go where the value is, trying to find companies that have been marked down by the market ' that is, those which are priced at a discount to their intrinsic value on a 12 to 18 month view.
The portfolio is designed to make returns in all market conditions. This is something that not many US funds have managed, with the exception of Fidelity American under the stewardship of John Muresianu, who has now left the group. The fund has a long-term tracking error of between 5% and 5.5%.
According to Hargreaves Lansdown, there are only six funds available to UK investors that can genuinely call themselves core US funds.
The group has classed any fund in the US sector which has a tracking error below 2% and a 75% or above exposure to the S&P 100 as US core.
The funds this comes up with are Aegon America, Axa American Growth, Old Mutual North America, Lazard North American Growth, L&G Barclays America and Fidelity Institutional Growth.
On this basis, Investec would not be considered a core fund, however, Aird pointed out that an equity fund with a tracking error of below 2% is getting close to a tracker and is limiting is ability to outperform.
Aird said that Investec consider a core fund as having a tracking error of between 4% and 6% as it gives it the opportunity to outperform on average 200-300 basis points a year over the benchmark and, on average, the Thornburg fund is 750bp a year ahead of the S&P 500 since its launch in 1995.
He added: 'We consider a core fund as one that can control risk, one that can add value and one that performs well over all market conditions.'
Coinciding with the launch, Investec confirmed that management of the offshore Investec Global Strategy Fund American Equity sub-fund, run by Nick Mottram, would move to Thornburg.
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