InvestmentsOct 10 2014

Global equities exposure reaps rewards for 7IM fund

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A highly diversified multi-asset portfolio invested in both active and passive securities has been a strong strategy for the CF Seven Investment Management Adventurous Fund.

Not for the those with a low tolerance for risk, the £75.38m portfolio is equity-centric, and has returned an excellent 50.93 per cent in the past three years, according to data from Morningstar, placing it 11th in the Investment Management Association’s Flexible Investment sector.

According to the portfolio’s latest factsheet, the actively managed multi-asset portfolio invests in global equities. The portfolio, which has been designed as part of a range that meets differing investment aspirations based on investors tolerance to risk, invests predominantly in passive funds, but does have exposure to individual securities.

The top three holdings are the £670.9m Lazard Emerging Markets Equity, at 4.5 per cent; the Topix Index Future, at 4.5 per cent; and the MSCI AC Asia Pacific excluding Japan Futures, at 4.3 per cent.

The minimum investment is £1,000, and the ongoing charge is a very low 1.5 per cent.

In the same peer group, the Legal and General Multi-Manager Growth Fund seeks to provide long-term capital growth by investing in a wide range of investment funds, including funds that are not authorised for sale in the UK, that hold company shares.

It may also invest in funds that hold bonds issued by companies, commercial property and cash.

The £220.5m fund has provided a 17.37 per cent return in the past three years, placing it 102nd in the sector. While the minimum investment is a low £500, it has a steep ongoing charge of 2.11 per cent, and yield is only 0.4 per cent.

L&G’s asset allocation team, who managed the portfolio, said they invest in both investment grade and sub-investment grade bonds to achieve their goals. However, the fund managers do not invest in derivatives without giving investors notice, although they will select investment funds that invest across all countries, commercial property and cash.

The top three holdings are the £161.2m GLG Alpha Select Alternative Class in GBP, at 5.6 per cent; HSBC Holdings, at 1.2 per cent; and GlaxoSmithKline, at 1.2 per cent.

ADVISER SAYS...

Paul Coffin, director and wealth manager at London-based Capital Financial Markets, said: “The CF 7IM Adventurous has performed well over one, three and five years, beating its peer group by 11 percentage points over five years.

“Underlying exposure is 36 per cent bonds followed by a broad spread of exposure to various equity sectors and global regions. One slight reservation is the low dividend yield of the fund, which is only 1.55 per cent.

“The L&G fund has under-performed the peer group benchmark. Growth over five years is 19 per cent against benchmark performance of 39 per cent.

“The divergence from the CF7 IM shows the importance of researching into the fund you buy. 87 per cent of the fund’s assets are currently exposed to equities, so this fund is more heavily correlated to equity markets, which makes its under-performance more significant given that equity markets have risen over the past few years.”

TOP FIVE HOLDINGS

CF 7IM AdventurousL&G Multi Manager Growth
Lazard Emerging Markets Equity 4.5%GLG Alpha Select Alternative Class in GBP 5.6%
TOPIX Index Future 4.5%HSBC Holdings 1.2%
MSCI AC Asia Pacific Futures 4.3%GlaxoSmithKline 1.2%
BAML Japan Small Capital 4%BP 1.1%
Magna Emerging Markets Dividend Equity 3.9%Royal Dutch Shell 0.8%