Barmac Asset Management has launched a defensive equity portfolio that invests in exchange-traded funds, investments trusts, Sicavs and Oeics. The Castleton Growth fund is the group's first investment vehicle since it became an investment manager in November 2002 and reflects the house view that we are currently in the midst of an ongoing bear market.
"This fund's methodology comes off the back of our belief that most bear markets last for some 10 years or so, with this one starting in 2000," said Andrew Bartles, a director at Barmac. "Our analysis is that, like all markets, bear markets do not move in a straight line and, provided the dips can be avoided, money can still be made."
Initially a 100% cash vehicle, the fund has only started to invest 20% in equities with the remainder staying in cash. In order to protect against losses, the portfolio adopts a strict trailing stop-loss strategy with individual stocks stopping at 10% and collectives at 3%.
"To increase safety, no collective can make up more than 25% of the fund," adds Bartles. "This means when a stop-loss is triggered, the maximum loss that can be incurred at that time on that position is three quarters of 1%. Meanwhile, an individual stock cannot represent more than 5% of the fund and this means, when the stop-loss is triggered, the maximum loss on this position is one half of 1%."
The Leeds-based boutique, which is also an investment researcher, monitors the position of markets with its own indicator tool 'The Barmac Indicator', which evaluates whether markets are in bullish or bearish phases.
Already available on the Transact platform and a number of open architecture offshore bonds, the fund has an initial charge of 5.5% and an annual management fee of 1.75%. There is a minimum investment of £1,000.
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