GROUP UNVEILS GROWTH, BALANCED AND INCOME PORTFOLIOS
Collins Stewart is within two months of launching three onshore funds of funds which use aggressive asset allocation switches to build client returns.
The growth, balanced and income portfolios will all aim to outperform their relevant Apcims benchmark but the focus will be on producing absolute returns for investors.
John Davey, chief executive of the private client division at Collins Stewart, said: 'Private clients want absolute returns rather than relative. They want to come out of the bank and invest to make more money. So we will have benchmarks but we won't let them wag the dog.'
The three portfolios are based on the way Collins Stewart already runs £500m in the Channel Islands for private clients. In 2001 the group's growth model witnessed big asset allocation switches between equities, bonds, cash and alternative investments. Collins Stewart will look to put alternative investments into the Oeic. Davey said: 'We are now starting to come out of the bear market and are slowly beginning to build up our long-only equity exposure.'
Collins Stewart has been looking to put performance-related fees on the Oeic but Davey said the FSA would not authorise this. 'We think it the most powerful way of tying fund manager and client interests together,' he said.
The group already offers a peformance fee structure to private clients. This consists of 0.75%pa to cover all basic costs of the service, such as dealing, and then 20% of any outperformance of an agreed target, typically an absolute one, such as 8%pa. There is also a high watermark in place.
'We have found it to be a big seller offshore,' said Davey.
While the Oeic's charging structure has not yet been fully finalised the initial charge of up to 5% will be available as commission and it will carry renewal. Davey said: 'The trail fee will be competitive with that offered by the industry.'
The onshore Oeic follows Collin Stewart's acquisition in 2001 of NatWest private clients.
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