UK investment manager Legal & General will enter the Absolute Return sector with the launch on November 10 of a new fund, the Diversified Absolute Return Trust, which will be managed b
UK investment manager Legal & General will enter the Absolute Return sector with the launch on November 10 of a new fund, the Diversified Absolute Return Trust, which will be managed by David North, head of asset allocation at Legal & General Investment Management.
The latest addition to Legal & General’s GBP30bn multi-asset range, the fund will aim to provide retail investors with access to investment techniques that have previously only been accessible to pension funds, institutions and hedge funds.
‘The turmoil in financial markets is changing investors’ expectations of risk and return,’ North says. ‘Many investors, while not risk-averse, are seeking to protect downside risk while seeking capital gains. The Diversified Absolute Return Trust is designed to harness investment opportunities across a broad range of asset classes using derivatives and cash instruments under Ucits III regulations.
‘Investors can now benefit from macro fund management techniques that may not have been accessible historically. This approach to asset management offers investors the potential for equity-like returns but without the volatility associated with traditional equity investment.’
The trust will principally invest in derivatives including index futures and currency forwards, and other over the counter instruments that provide exposure to a wide range of assets across all markets and currencies, and will use derivatives actively to mitigate risk. The trust may also invest in collectives, equities, securities, money market instruments and cash.
‘David North is widely recognised as one of the finest asset allocators in the UK,’ says Ben Waterhouse, Legal & General’s sales director for retail investments. The Diversified Absolute Return Trust is the natural evolution of our GBP30bn multi-asset fund range. At a time when investors are exceptionally risk-conscious we expect an absolute return approach to asset allocation to be very popular.’
The fund aims to provide positive returns in all market conditions and has as performance objective to provide a positive return over the short term (on an annual basis) and to outperform equities (measured against the FTSE All Share Index) over three-year rolling periods.
Investment is available as an individual savings account, for ISA transfers and direct investment in the unit trust. The minimum investment is GBP500, while for the 2008-09 UK tax year the maximum investment in an ISA is GBP7,200. There is no limit for ISA transfers and direct investment in the unit trust.
The initial charge for retail investors is 5 per cent and the annual management charge is 1.5 per cent, deducted from income). There is no initial charge for institutional investors with a minimum GBP100,000 to invest, for which the annual management charge is 0.75 per cent.
The trust pays a commission to advisers of 3 per cent of the sum invested plus 0.5 per cent trail. No commission is payable on switches from existing Legal & General investments, nor for investments made into the institutional unit class.
