former old mutual fund manager will run a portfolio of stocks and exchange traded funds
Logie Cassells is making a return to retail fund management next month and will run a thematic-driven Oeic, the CF Richmond Core fund.
Cassells left Old Mutual, where he had run the group's UK Growth, Hallmark Growth and Hallmark Income funds, last year and teamed up with boutique Richmond Fund Advisers (RFA). Joss Smith, a partner of RFA, will assist in the running of the portfolio.
The fund will be a concentrated global vehicle, typically holding 30-40 stocks, with stock selection driven by Cassells' conviction that demographics is a crucial investment theme. Cassells will invest directly into the UK and US stock markets, but will gain exposure to European, Japanese, Asian and emerging markets through exchange traded funds (ETFs).
Richmond Core will also reserve the ability to invest in fixed interest assets and so will be in the active managed sector and be benchmarked against the FTSE Apcims Private Investors Growth Index.
Cassells said using ETFs will enable him to gain exposure to various markets and sectors at a low cost and remove stock selection risk from what may otherwise be a confident sector bet.
The launch is targeted for mid-August and RFA is working through the charging structure and signing off the fund literature with the group's administrator, Capita Financial Managers.
Given Cassells' belief that charges will increasingly come under pressure, the annual management fee is expected to be around 1.25%, including trail commission for intermediaries.
The vehicle will also be available for inclusion in Selestia's onshore bond offering from launch. RFA's own website, www.richmondfunds.com, to be launched around the same time as the fund, will carry product literature and detailed breakdowns of holdings.
Alan Steel, managing director of Alan Steel Asset Management, is backing the fund from launch and the portfolio will have around £5m when its offer period opens. Steel and Cassells have been working together on the launch and since last July Cassells has been monitoring the performance of a stock watchlist of companies he feels meet his thematic criteria.
Besides conducting his own proprietary research, Cassells buys in independent research from US boutique Ned Davis and UK stockbroker Collins Stewart.
Cassells' belief that demographics is a key driver behind the markets is in part inspired by the theses of US academic Harry S Dent. Both men advocate the view that the identification of broad fundamental trends, of which demographics is the primary example, add value in the long term, while technical, probabilistic analysis is more critical in the short term.
The demographics theme goes beyond the more obvious stocks and sectors such as healthcare and nursing homes, Cassells stresses, and covers a diverse range of areas being sold to growing and affluent 45-to-50-year-old consumers.
He sees opportunities in technology, citing the brand strength such companies as Ebay and Amazon now have among babyboomers. Biotech is another area he is monitoring, but while a long-term believer in its potential, he does not want to enter the sector at current levels.
Conversely, Cassells is wary of pharmaceuticals as he believes government is increasingly looking at ways to deflate drug price inflation.
At launch, barring unforeseen economic shocks, he expects the asset allocation to be be 100% equities split 50/50 between domestic and overseas equity.
Of the fund's international exposure, some 30% is in the US. The remainder, which will be achieved through buying ETFs, is split equally between Germany, Korea, Japan and emerging markets.
'For the last couple of months we have been very happy with running the portfolio with that asset allocation and will continue to do so, but maybe take profits later in the year,' Cassells added.
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