Seven Investment Management (7IM) said it had unitised its “smart passive” baskets of equities which had been running as holdings in 7IM funds to launch a range of single sector funds that will be available as part of portfolio planning for private clients and institutions.
The 7IM European (ex UK) Equity Value fund, the 7IM UK Equity Value fund and the 7IM US Equity Value fund all launched on April 15 this year, while the 7IM Emerging Markets Equity Value fund is set to launch later in 2015.
In a statement, the company said it “doesn’t believe that the terms alpha and beta mean much to clients outside the industry”, which is why it has adopted the term “smart passive”.
The funds aim to outperform the index by 1-2 per cent at a lower cost than traditional active management.
The range is being run by chief investment officer Chris Darbyshire, alongside Alessandro Laurent and Christopher Cowell.
The ongoing charges on the UK Value fund, the US Value fund and the European Value fund are 0.35 per cent, while the Emerging Markets Value fund will have ongoing charges of 0.40 per cent once launched.
Mr Laurent said: “Our research shows that investing in cheap stocks, or value stocks, can achieve outperformance of 1 per cent [to] 2 per cent through time. However, investing in just cheap stocks can have quite high risks at times and the 7IM funds have been set-up to try and minimise these risks. For instance, value stocks can be volatile and be cheap because they are suffering financial difficulty.”
He added: “To address these weaknesses 7IM focuses on cash measures rather than accounting measures, which can be manipulated. We also seek to reduce the funds’ volatility by ensuring the funds are not taking unnecessary risks by focusing too much on risky companies or risky sectors.”