By James Thorneley Dresdner RCM Global Investors is to offer a 0.5% discount on its UK Mid Cap unit ...
By James Thorneley
Dresdner RCM Global Investors is to offer a 0.5% discount on its UK Mid Cap unit trust
From the 1 October to 29 October the initial management fee will be 3.5% for purchases of units in the trust. The initial charge for Isa and Pep business will remain unchanged at 3% as will the annual charge of 1.25
Derek Lygo, manager of Dresdner RCM UK Mid Cap unit trust, has recently increased the number of holdings in the fund from 55 to 65 stocks. The decision follows increased interest in the fund from investors on the back of strong performance of mid cap stocks this year. In the year to date the FTSE 250 has grown by 17.99% whereas the FTSE 100 has increased by only 0.74
Since the start of the year £34m worth of new units have been sold in the unit trust. The fund's market cap now stands at £81.3m at this time last year it was only £12m. Lygo said the increase in size since September 1998 was due to around £50m of new units being sold by Dresdner in addition to asset growth of £20m. As a result the style he employs on the portfolio has been altered slightly. Lygo said: "When the fund was £12m in size, the portfolio was pretty concentrated. As the fund increased in size we decided to spread the risk by increasing the number of holdings although I have not changed the portfolio's risk parameters. The maximum exposure I can have in a stock is 5
The fund has a bias towards the information technology sector and is heavily overweight against its benchmark the FTSE 250 (excluding investment trusts). Lygo said: "The fund has traditionally favoured IT stocks. I recently bought shares in Baltimore, a company which is developing decoder security software. With the growth of e-commerce more and more transaction over the internet will take place and to prevent fraud these messages will be in code
"In addition I have bought shares in BATM which is involved in developing switching systems for the internet which convert information sent thr-ough cable to a screen format. One of the few constraints of the internet is speed of access which these switching systems are overcoming
"Though we are overweight in technology I try to avoid holding actual internet companies. I like stocks which produce a physical product and there is so much competition between internet companies it is uncertain which ones will come out on top
The fund's largest sector weighting is cyclical services with a portfolio exposure of 29.24%. This is followed by the information technology and basic industries sectors with weightings of 23.21% and 13.26% res-pectively
The fund has performed consistently well over the past three years. It is ranked nine out of 223 in the UK All Companies sector over three years, 13 out of 255 over one year and eight out of 271 over three months
The minimum unit trust and Isa investments are £500 and £1,000 respectively. Intermed-iaries receive 3% initial comm-ission
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