Neville James is seeking Imro approval for the launch of its first onshore Oeic, and plan to offer a...
Neville James is seeking Imro approval for the launch of its first onshore Oeic, and plan to offer a corporate bond fund as its first sub-fund, writes Ruth Alexander.
The group, which in the past has concentrated on traded endowment policy products, hope to have the Neville James Investment Fund's corporate bond sub-fund in place within four months.
The Neville James Corporate Bond Fund, which is expected to have a 1% annual management charge, a 1% entry fee and offer up to 3% commission to IFAs, will be managed by Peter Mason, who joined the group in August 1999 as investment director. The corporate bond fund, which will hold between 25 and 30 stocks in its portfolio, will invest about 30% in high yield and 70% in investment grade bonds to achieve what Mason terms a good running yield and risk profile.
The target yield for the fund will be between 8.5% and 9%. The initial size of the fund, which will be invested 80% in the UK and 20% in Europe, is £10m, although Mason is aiming for an eventual size of between £30 and £40m. Mason is currently favouring service suppliers (outsourcing suppliers and IT suppliers, for example) and financials, in particular, for their defensive nature, and expects these to form the base of the portfolio from which to branch off into more risky bonds, such as those issued by pharmaceutical companies, he said.
The fund will have a core investment of blue chip investment grade bonds to create a stable base, Mason said, adding he will then invest in small and mid-cap higher risk bonds to enhance the fund's yield.
Technology, media and telecoms stocks are not particular favourites of Mason, who said many of the yields on these stocks are too low and do not compensate for the risk involved in investing in them at this time.
He said: "I don't favour the telecom sector at the moment. BT, for example, is looking unattractive as the share price has dipped because of the company's exposure to the high cost of the third generation licences. By the time we launch, however, there may be new issues on the market, which look interesting."
Mason expects the profitability of the UK and European markets to hold up well over the next 12 months, saying they are less exposed to the slowing US.
Following 2016 thematic review
December 2018 or early 2019
Feasibility study due
'Let’s be bold enough to demand change'
Joint life second death option added to relieve tax burden on couples gifting assets