Wed, 10/09/2008 - 07:00
The newly-launched PSigma Balanced Managed Fund of Funds will invest in collective investment schemes, unit trusts, Oeics, investment trusts, funds of hedge funds and exchange-traded funds in order to achieve long-term capital growth and total return, according to the fund's manager Tom Becket.
"The PSigma Balanced Managed Fund of Funds will maintain the current defensive stance in our asset allocation, as we have continuing fears over the outlook for the global economy and we view the outlook for equity markets as finely balanced," he says.
"The portfolio is starting with a total of about 40 per cent in equities, skewed toward international markets, where we see a greater opportunity set in a low-growth environment and the potential for enhanced returns from ongoing sterling weakness.
"Unlike many of our competitors, we particularly like to use funds with flexible global mandates, among which Graham French's M&G Global Basics will be a core holding. French's investment philosophy and vision for the future is completely in tune with our thinking, whilst we also admire M&G's rigorous risk discipline.
While Becket expects equity markets as a whole to remain under pressure in the short term, be believes that thematic equity fund ideas should continue to deliver positive returns throughout the current bear market.
"One of our favourite areas at present is health care, where we are attracted by the short-term defensive characteristics and exciting longer-term growth potential of a health care revolution driven by emerging market demand for improved medicine and medical technology," he says. "We will use Polar Capital's Healthcare Opportunities, whose impressive managers we feel are best placed to select high-quality growth companies in a notoriously difficult sector.
"Following the monumental sell-off across financial markets over the past year, we believe that within credit markets the huge dislocation now presents fantastic long-term opportunities. We are particularly enthused about the attractive yields to maturity that can be found on investment grade financials bonds, which have been sold off by distressed sellers at a time when few were willing to buy them.
"We believe that the experiences of Northern Rock and Bear Stearns show that the Bank of England and the US Treasury have decreed the banks as sacrosanct, so there is virtually no chance of bondholders not getting back their capital invested.
"We have a healthy weighting in the Artemis Strategic Bond fund, run by the excellent James Foster and Alex Ralph, who have more than half of their fund in financials bonds and who run the fund proactively, using all the flexibility available to fund managers effectively."
PSigma Investment Management was established in 2002 and currently manages more than GBP750m in assets for private clients, charities and self-administered pension schemes. "We understand that multi-asset portfolios are the best way to help reduce risk and aim to generate good returns through all market conditions," says managing director John Howard-Smith.
"The Balanced Managed Fund of Funds is an extension of the successful Wealth Management Solutions product, managed by and previously only available to private clients of PSigma Investment Management.
"Wealth Management Solutions is a multi-asset strategy, blending funds within different asset classes and combining our twin skills of long-term strategic and short-term tactical asset allocations.
"The asset allocations have been entirely flexible and have been modified greatly over time, as they have shifted positions in anticipation of changing financial market conditions. Over three years, they have delivered equity-style returns with far less risk and reduced volatility, whilst more recently they have outperformed equity markets strongly on the downside, proving that their asset allocation has added value."
"Investors will hopefully recognise our ability to deliver [positive] real rates of return and that the old-fashioned traditional split between property, equity and fixed interest is outdated. We have been extremely successful with our thematic investments over the past few years, especially in resources and gold. We also believe that our experience in using alternatives such as hedge funds will assist us to deliver strong returns over the years to come."
The largest components of the launch portfolio are global equities (23 per cent), UK equities (17 per cent), alternatives (15 per cent) and cash (10 per cent). Resources make up 4 per cent, emerging market debt and global property 3 per cent each, and soft commodities and water each 2 per cent.
The fund, which has sterling as its base currency, carries an initial charge of 5.25 per cent and an annual management fee of 1.5 per cent as well as a registration fee of 0.15 per cent. The minimum initial investment is GBP10,000.
The fund is a unitised version of the Wealth Management Solutions multi-asset fund of funds service, which was launched more than five years ago with the quantitative support of sister company, PSolve, the specialist investment consultancy within the Punter Southall Group.
PSigma Asset Management was formed in February last year as a joint venture 50 per cent owned by founder partners Ian Chimes, Bill Mott, Graham Fuller and 50 per cent by Punter Southall.
Its first product offerings are the PSigma Income Fund, managed by Mott, the PSigma UK Growth Fund, managed by Neil Cumming, the PSigma American Growth Fund managed by James Abate of Centre Asset Management under a sub-advisory agreement, and the PSigma European Income Fund managed by the European equity boutique 2CG under a sub-investment management agreement.
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