Latest standards of European regulation of the financial services sector have been cited by Iimia as the basis for its new Oiec that will mix closed and open-ended funds for the first time.
UCITS III – Undertaking for Collective Investment in Transferable Securities – means Iimia’s vehicle will mix growth, income and growth and income sub-funds under one umbrella depending on the individual investor’s objectives.
Each of the sub-funds will be free to choose investments from a total range of some 2,600 closed and open-ended funds.
Coupled with the broader universe of funds, the new Oeic will also apply management fees on an absolute basis – although not applicable in the same way as a hedge fund.
In short the charge will consist of a 1% annual management fee, with a performance fee set at 15% of outperformance over the London inter-bank offered rate + 2% (LIBOR+2%).
The Oiec will not be benchmarked against an equities index, nor will it assign any particular proportion of investment trusts to unit trusts within the three sub-funds. The ratios will change depending on a number of factors, but primarily according to the relevant sub-fund manager’s view of which investments should be in the portfolio to meet his particular yield target or otherwise.
The managers of the three sub-funds are Nick Greenwood (growth), David Lockyer (income) and Richard Scott (growth and income).
”We’re trying to beat a deposit in absolute terms,” says David Crouchen, director of regional sales.“We’re not interested in relative returns.”
Crouchen predicts some may try to follow the model, but they would have to deal with issues, for example, of total expense ratios and investment trusts regarding the closed-end fund parts of the funds.
There is unlikely to be a roadshow promoting the product, which would be seen as having a good start if it pulled in about £25m in its first year, Crouchen adds.
”We have low costs, so we don’t need £100m-plus,” he says.IFAonline
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