Cornelian gets UK big cap value

The £107.1m fund sits 25th in the Investment Association’s Mixed Investment 40-85 per cent Share sector, outperforming it since mid-2012.

According to its latest factsheet, the portfolio’s objective is to provide long-term capital growth from a balanced portfolio of equities, bonds, government securities and collective investment schemes.

Fund manager Hector Kilpatrick and team of four could also choose to focus in a particular region or sector, or hold a high level of cash or money market instruments.

It has a 28.2 per cent UK equity exposure, and an international exposure of 43.6 percent, of which US equities account for 14.5 per cent and the eurozone 10.2 per cent.

The portfolio’s remaining equity allocation is spread across Europe, Japan, the Far East, international and emerging markets.

Absolute returns, commercial property, private equity, infrastructure funds and cash make up a 15.2 per cent allocation.

Top holdings are the £8.4bn Pimco Global Investment Grade Credit, at 5.93 per cent; the £686m TwentyFour Dynamic Bond, at 4.61 per cent, and the £1.6bn GLG Strategic Bond Fund, at 4.37 per cent.

The portfolio’s minimum investment is £1,000, and the ongoing charge is 1.75 per cent, according to FE Trustnet.

In the same peer group and time period, the Fidelity Multi-Asset Allocator Growth Fund has underperformed the sector, although it has managed to return a decent 22.98 per cent in the past three years, placing it 147th in the sector, according to FE Trustnet.

The £96.3m portfolio seeks to provide long-term growth by investing primarily through other regulated collective investment schemes – including schemes managed by Fidelity – to obtain a global exposure to mostly equities, bonds, commodities and property.

Fund managers Kevin O’Nolan and Nick Peters said their objective is to invest mainly in index tracking funds, as part of a lower-cost investment approach. Derivatives may also be used to keep cost and risk down. However, they could look outside the fund’s main region, sector, industries or asset classes.

The portfolio has a 57.2 per cent equity exposure, according to its latest factsheet, and similarly the largest holding is the UK, at 22.6 per cent. This is followed by the US, at 18.1 per cent, and Europe, at 6.2 per cent.

The next biggest asset class are bonds, at 20 per cent, with UK Fixed Income making up 16 per cent, and the rest in Global Fixed Income.

The remaining assets are in commodities, property, alternatives and cash.

The portfolio’s top holdings are the £1.5bn Fidelity Index UK Fund, at 22.6 per cent; the £270m Fidelity Index US Fund, at 15.4 per cent, and the Bloomberg Commodity Index, at 7 per cent.

The minimum investment is £1,000, and the ongoing charge is 1.2 per cent, according to FE Trustnet.

ADVISER SAYS....

Rob Morgan, pensions and investments analyst at Bath-based Charles Stanley, said: “The Cornelian fund has been a strong performer in the sector in recent years, despite being exceptionally diverse. A balanced portfolio of equities, bonds and collectives, it incorporates a decent slug of alternatives such as property, private equity and infrastructure funds.

“The UK equity portion is primarily individual equities chosen by the team. This helps keep charges down, and the ongoing charge is reasonable for the clean-priced units. Meanwhile, overseas equity and fixed-interest exposure is primarily through collectives, which are mostly active-managed rather than passive. The disadvantage of this is the team have to combine two skill sets; of individual equity management and fund selection, although so far they have done a good job on both counts.

“The Fidelity fund is designed as risk-graded, one-stop shop portfolios, and it sticks to underlying passive funds, both Fidelity and external, to keep costs low, and asset allocation is team-managed with the aim of adding value based on their economic research and quantitative models.

“With an admirably low OCF, it is likely to appeal to investors whose priority is minimising charges. However, for me the merits of combining a portfolio of passive funds with active allocation are debatable, and I note the fund has underperformed the sector since launch, albeit marginally, which would indicate that, thus far at least, asset allocation has not added value.”