Investments  

Product review: F&C MM Lifestyle Foundation fund

F&C is adding to its suite of risk-rated products with the MM Lifestyle Foundation fund.

The lowest-risk fund in the lifestyle range, the new fund will be in risk band three on the Distribution Technology Dynamic Planner scale.

Along with a strategic asset allocation approach determined by the risk profiler, managers will use a controlled tactical asset allocation of plus or minus 5 per cent in one asset class.

Article continues after advert

The new fund joins four other existing funds in the range spanning risk profiles four to seven. It will invest in a basket of 25 to 40 funds or instruments and, at launch, is expected to hold 64.3 per cent in cash or fixed income, 8 per cent in property and 27.7 per cent in equities.

The annual management charge is 0.5 per cent, with a cap of 1.15 in place for ongoing charges.

www.fandc.com

Comment

If you are going to offer a range of risk-rated products, it makes sense to offer as wide a range of possible – with the exception of the lowest risk, as that would probably include little other than cash.

F&C’s move to add another fund to the range affirms its belief in such strategies and the resulting interest from advisers and investors. Across all of the Lifestyle funds, F&C manages £453m in assets under management. Initially launched in 2007, it is a little late in the day to be adding another product, but if the demand is there, it makes sense to meet it.

The range is co-managed by Rob Burdett and Gary Potter, who have made a name for themselves in the risk-rated funds area. F&C makes a point of these funds being risk-targeted rather than risk-rated, the key distinction being that targeted funds are managed to keep within the risk bracket, while rated funds simply have a label based on a snapshot in time.

As time goes on and more advisers use these funds, the distinction is going to become ever more important; if we have a severe economic shock again, some investors in risk-rated funds, rather than targeted, might find their holdings have suddenly become much more risky.