Fund combination working three years on: Charles Stanley

Charles Stanley has used a “mix and match” of open and closed-end funds to give its discretionary investment management service for intermediaries flexibility, its director of wealth management has said.

Gerard Sweeting said the discretionary fund management model portfolio service, which celebrates its third anniversary this month, used different approaches to suit its choice of exposure.

He claimed that the service, which consists of three portfolios, used investment trusts for exposure to areas such as the emerging markets and Europe, but had an overall “mix and match” approach.

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PortfolioCumulative performance for 31/10/2011-31/10/2014, gross of investment management fees
DFM Growth+58.6%
DFM Balanced+55.2%
DFM Income+48%

He said: “With property, we want that direct investment into property, so we want an open-end fund.

“For infrastructure we have to use a closed-end fund because infrastructure is a quite a long-term investment.

“If that were open-ended and our stockholders all decided to sell, it would be an impossible job to get out of that.”

The three portfolios, which focus on the areas of growth, balanced and income respectively, are actively managed by Charles Stanley’s private client research team for UK equities, the bond division for fixed interest and Charles Stanley’s collectives portfolio service team for international equity, alternative and property fund choices.

Mr Sweeting said: “The portfolios are directly invested in UK equities and bonds, with collectives providing the international, commercial property and alternatives fund exposure; something rather different from a purely collective-based approach.”

Speaking about the team’s choice of funds, he said: “We use whoever we think is the best manager for that area.”

The funds were set up in November 2011 using seed capital from Charles Stanley.

Adviser view

Andrew Reeves, director of Northamptonshire-based The Investment Coach, said: “I suspect if a closed-end fund is well-managed it can produce returns, but for me it is more complicated and harder to explain to clients.”