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.

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.