Oct 22 2014

Mixture of UK and overseas equity helps Scottish Widows fund

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A combination of equity and fixed interest security funds has paid off for the Scottish Widows Progressive Portfolio, which has enjoyed 37.9 per cent returns in the past three years.

The fund, owned by Aberdeen Asset Management, focuses on achieving long-term growth by investing mainly in multi-manager funds, with a mixture of up to 85 per cent in equity funds and a “moderate” proportion in fixed interest security funds, and investments in both UK and overseas markets.

In their latest factsheet, fund managers Mark Henzell and Matthew Davies said government bonds had performed well but lagged behind their corporate counterparts, while world equity markets had continued to rise.

The £225.41m fund has exposure to assets across the globe, with 29.5 per cent in UK equity, 29.3 per cent in North America equity, 14.5 per cent in UK fixed interest, 10.5 per cent in overseas bonds, 9.2 per cent in Europe (excluding UK equity), 3.9 per cent in Japan equity, 2.5 per cent in Pacific (excluding Japan equity) and 0.4 per cent money market exposure.

The minimum investment is £1,000, the maximum initial charge is 7 per cent and the ongoing charge is 2 per cent.

In the same IMA sector, the NFU Mutual Mixed Portfolio 40-85 per cent Shares Fund invests mainly in other funds managed by NFU Mutual Unit Managers, with the balance invested in third party funds with compatible objectives.

The fund, which has an investment objective of long-term capital growth and moderate income, aims to gain exposure to UK and international equities with approximately 25 per cent in fixed income stocks and cash, typically between 40 and 50 per cent in exposure to UK companies and between 25 and 35 per cent in international companies.

According to the latest factsheet, the managers have allocated 43.94 per cent to UK equities, 17.08 per cent to global emerging market equities and 9.36 per cent to UK corporate fixed interests.

It also invests 8.68 per cent in money market, 7.98 per cent in UK gilts, 5.28 per cent in US equities, 3.47 per cent in European equities, 2.81 per cent in Asia Pacific (excluding Japan) equities and 1.4 per cent in Japanese equities.

The £161.57m fund, which is mainly managed by Paul Glover, Matthew Bennett, Adam Carroll and Neil Wicks, has returned 24.46 per cent in the past three years.

It has a 3 per cent initial charge, an AMC of 1.25 per cent and an ongoing charge figure of 1.36 per cent, according to its latest factsheet.

Scottish Widows Progressive Portfolio A AccNFU Mutual Mixed Portfolio 40-85% Shares Fund B
Top five holdingsTop five holdings
Russell Invest Co US Equity I Acc Nav 19.1%NFU Mutual UK Growth I 29.58%
Swip FD Management Swip MM UK Eq Focus A Acc 13.3%NFU Mutual Gilt and Corporate Bond I 17.85%
Swip FD Management Swip MM UK Eq Gth A Acc Na 13.3%NFU Mutual Global Growth I 16.68%
Russell Invest Co Contl European Eq I Acc Nav 9.2%NFU Mutual Global Emerging Markets I 14.9%
Russell Investment US Quant I Acc GBP 7.2%NFU Mutual UK Equity Income I 14.09%

Adviser says...

Juliet Schooling Latter, research director at London-based Chelsea Financial Services, said: “The Scottish Widows Progressive Portfolio has the freedom to invest globally. The seasoned manager, Mark Henzell, can and does take large over- and underweight positions if his conviction is strong enough. The primary driver of returns is the manager’s asset allocation calls, and in this endeavour the manager has been successful, with the fund producing some strong risk-adjusted performance figures over recent years.

“The NFU Mutual Mixed Portfolio is also fettered, and is made up of a number of NFU’s own funds. The fund’s performance has been poor, and it has consistently underperformed its benchmark, particularly over the last three years. The fund is severely restricted as to what it can invest in, as NFU has a limited range of funds.”