Margetts achieves steady returns despite high TER

The fund, which is currently placed 92 out of 109 in the Investment Management Association’s Flexible Investment sector, is delivering year-to-date trailing returns of 6.10 per cent, although its performance lags behind the IMA sector average of 19.19 per cent over three years.

Managed by Toby Ricketts, it is one of four Margetts risk-rated funds alongside the £139.1m Providence Strategy Fund, the £113m Select Strategy Fund and the £72m International Strategy Fund.

It seeks to provide long-term capital growth by investing in an aggressively managed global equity mandate with particular attention paid to the Far East and emerging market funds.

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However, when compared to the top performers among its IMA peer group, its returns over three years are some way behind with peer group leader, the £32.78m TB Wise Income Fund generating three-year returns of 40.88 per cent.

The portfolio’s top holding is the £4.2bn First State Global Emerging Markets Fund. It has a 21.67 per cent exposure to developed Asia, a 16.09 per cent exposure to Asian emerging markets, and a 12.50 per cent exposure to the UK.

At 2.59 per cent, the fund’s total expense ratio is higher than the peer average of 1.85 per cent, which may account for some reduction in overall performance.

Its maximum initial charge is 5 per cent, with a maximum annual management charge of 1.48 per cent, and a minimum investment of £1000. The fund does not impose an exit charge.

Just above the Margetts fund in the IMA Flexible Investment sector is the £260.46m Henderson Multi-Manager Active Fund.

It is placed 91 out of 109 within the sector, delivering three-year returns of 10.85 per cent. However data from Morningstar shows a more positive performance in 2013 with year-to-date trailing returns of 19.33 per cent.

Unlike the Margetts fund, the portfolio has a maximum exit charge of 3 per cent, while its TER is also higher than average at 2.49 per cent.

Launched in June 1996, the fund is managed by Bill McQuaker and Helen Bradshaw and seeks to achieve capital growth by investing primarily in a globally diversified mix of equity funds.

The fund’s largest holding is the $2.57bn (£1.57bn) Findlay Park American Fund, followed by the $580.24m (£354.98m) Brown Advisory US Equity Value Fund.

It has a 33.26 per cent exposure to the UK, and a 26.91 per cent exposure to the US.

The portfolio has a minimum investment of £1000, and a maximum annual management fee of 1.50 per cent.

Top 5 Holdings Top 5 Holdings
Margetts Venture Strategy FundHenderson Multi-Manager Active Fund
• First State Global Emerging Markets Fund: 7.76%• Findlay Park American Fund: 8.34%
• Aberdeen Emerging Markets Fund: 6.96%• Brown Advisory US Equity Value Fund: 6.84%
• Aberdeen Asia Pacific Fund: 6.74%• Artemis European Growth Fund: 6.09%
• Old Mutual UK Smaller Companies Fund: 6.67%• Henderson Global Growth Fund: 5.37%
• UBS Emerging Markets Equity Income Fund: 6.42%• JOHCM UK Opportunities Fund: 5.15%

Adviser View

Gavin Haynes, managing director of Bristol-based Whitechurch Securities, said both funds had performed well net of fees. He added: “If they suffer a period of underperformance, they will come under scrutiny.

“The TERs on both funds are at the high end so the managers are under pressure to perform.