By Robert Stock Close Finsbury is offering Isa wrappers for its Oeic funds and investment trust ran...
By Robert Stock
Close Finsbury is offering Isa wrappers for its Oeic funds and investment trust range for the first time.
All of the Oeic funds, except the Universal Life Sciences Institutional share class, carry a 4.5% initial charge, 1.5% annual management charge, and offer 3% initial intermediary commission as well as 0.5% trail commission.
The introduction of the Isa wrapper, which is now available, includes the Close Finsbury UK Equity Fund, which since 2 January has been managed by James Barstow, managing director of Mars Asset Management, along similar lines to his Aurora Investment Trust.
The UK Equity Fund was previously managed by Mark Tyndall of Artemis, but this arrangement was terminated by mutual agreement at the end of December 2000.
Aurora was named UK Growth Investment Trust of the year at the Investment Week Investment Trust Awards for 2000. IFAs investing clients' money in the Close Finsbury UK Equity Fund will now be buying into the same process, which, according to Standard & Poor's, has achieved mid to mid returns of 101.1% in the three years to 30 January for Aurora against a UK growth sector average of 46.3%.
Barstow now managed the fund with a top-down style and concentrated portfolio of about 30 holdings as opposed to Tyndall's broader, bottom-up portfolio. Barstow explained that his disciplined top-down approach is premised on his view that inflation is yesterday's problem and that history is repeating itself with emerging markets undermining UK manufacturing, technology booming and free trade increasing.
All these factors lead Barstow to avoid manufacturers and retailers, but to invest in interest rate-sensitive stocks such as financials, housebuilders and building materials firms because he believes that interest rates have a long way to fall.
He also likes pharmaceuticals as a long-term play on UK demographic changes, although is not adding to them at the current time. He also has exposure to Ireland, which he sees as a potential European bull market, through UK stocks.
Barstow said pharmaceuticals remain a long-term play on old age, particularly in view of the serious demographic problems that will be encountered by the western world over the next three decades. He said pharmaceuticals have performed extremely well since March last year, but a greater emphasis should now be placed on interest rate sensitives such as building materials as rates have a long way to fall. He said: "If you look backwards, you should have been heavily into technology until 9 March, then moved into defensives. Since 3 January, when Greenspan cut interest rates, you should have been out of defensives and into interest rate sensitives."
The Close Finsbury fund has 25% in construction, 7% in pharmaceuticals, 9% in transport, and 18% in financials. The concentrated portfolio of 30 stocks, which is tighter than Aurora's target range of 35 to 40 holdings, represents the number of positions Barstow believes he can effectively manage. The narrow portfolio, he said, therefore also provides a risk control function. It also allows Barstow to be more decisive and give investors greater exposure to his best ideas.
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