uk Opportunities portfolio to be an aggressive stockpicking fund aiming for absolute returns
Newton's forthcoming UK Opportunities fund will be an aggressive stockpicking vehicle managed on a total return basis.
The new sub-fund to the Newton Oeic range is to be managed by John Wood, although Robert Shelton will also be involved in running the portfolio.
The fund, which will be measured against its peers in the UK All Companies sector rather than a benchmark, is aiming for absolute returns.
UK Opportunities will have a concentrated portfolio of around 40 stocks, with the top 10 holdings expected to comprise around half its assets.
The launch period will be 21 January to 8 February, during which the initial charge will be reduced by 1% to 3% and offered at 100p per unit. The standard initial charge will be 4% and the annual management fee 1.5%.
The fund is Isable and available for Pep transfers. Minimum investment levels are £50 per month for the regular savings scheme or £1,000 lump sum.
Helena Morrissey, chief executive officer of newly-rebranded Mellon Newton, said the fund will be run as a multi-style best-of-breed vehicle in terms of the Newton analysts' stock ideas.
She said: 'It will have a significant tracking error but risk controls are in place. These are the house ideas not just one individual's. The fund will not be restricted by sector or valuation technique constraints such as growth or value. It will focus on total returns, aiming to maximise capital growth on a one-to-three-year time-frame.'
The portfolio will also invest across the market cap range, although it is expected to be more slanted toward large caps at launch. Morrissey said: 'It is down to which companies we think will be the top performers.'
Wood believes the fund launch is well timed to take advantage of an impending economic recovery and the stockpicking focus is suited to the current investment climate. He said: 'In an environment of low growth and low inflation, corporate profits will remain under pressure, leading to lower nominal returns than historically has been the case.'
'Those returns will not be spread evenly through the market so it is crucial to identify companies that will prosper.'
Individual stock holdings are expected to average 2.5% of the portfolio, although the fund will be able to hold up to 5% of a stock at purchase.
Newton has also bolstered its European desk with the appointment of Raj Shant as its head. Shant joins from Credit Suisse in March and will fill the gap left after Keiron Gallagher departed in November.
Aaron Barnfather ran all of the group's European funds in the interim, although he has recently been aided by the return of European small-cap specialist Daniel White from Dresdner RCM Global Investors.
Although the full details are still to be decided, Shant is expected to take the reins of the £362m Newton Continental European fund and a number of institutional mandates.
Morrissey said: 'The likelihood is that he will take over our Continental European fund. He also has institutional experience and we have a lot of institutional money in Europe.'
Newton Continental European had its Standard & Poor's AA rating placed under review after underperforming in 1999 and 2000. Over the three years to 4 January, the fund has posted growth of -2.4% bid to bid, compared to a sector average of 5.79%.
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