BMO Global Asset Management has opened its £2.2bn Pyrford Global Total Return (Sterling) Fund to investment from UK retail clients for the first time through a new GBP share class.
The fund, which was originally launched in 2009, is aimed at generating higher-than-inflation returns with low volatility and capital preservation over rolling 12-month periods.
It is diversified across asset classes, geographies and individual holdings, while currency exposure is actively managed with a view to preserve capital, according to the investment firm.
According to the firm’s latest factsheet, the fund has 54 equity holdings and 11 bond holdings.
The fund, managed by Pyrford’s 14-strong investment team, generated all-time high returns of 12.72 per cent in April, according to FE Analytics data. Returns plummeted by 6.34 per cent to a low of 5.57 per cent in August, but has recovered to 8.48 per cent as at 8 October.
In addition, BMO has claimed that the fund’s underlying strategy, which was launched in 1994, has returned on average 7.8 per cent (gross) per annum, and has had only one negative calendar year in the past 20 calendar years.
Provider view
Rob Thorpe, head of UK retail and wholesale for BMO Global Asset Management, said: “This strategy has been delivering absolute returns on a consistent basis since its launch more than 20 years ago, and provides a compelling option for retail investors who are looking for a clear and straightforward approach to absolute return investing.
“As economic growth remains uncertain in many economies, and interest rates remain at record lows, a number of retail clients are seeking downside protection. The launch forms part of our wider plans to accelerate our expansion, following the acquisition by BMO Financial Group last year, by offering an enhanced suite of products to meet client demand.”
Adviser view
Frances Kemp, certified financial planner at Norfolk-based Nurture Financial Planning, said: “I think that there is an appetite for absolute return funds. Having a diverse fund is particularly important in this day and age given the extent of market volatility.
“I think the 0.81 per cent annual management fee is the going rate at the moment. The most common way to access these types of investments is through wraps and platforms. Custodial charges are generally around the 0.3 per cent mark. This, on top of the fund management charge and the adviser fee could easily result in a total charge upwards of 1 per cent.
“This product might be best suited to clients who have very specific needs, such as saving up for school fees.”
Charges
An annual management charge 0.81 per cent applies for standard retail shares.
Verdict
In recent times funds for income have hogged the limelight, which is largely due to an increase in demand for these products following the implementation of the pension freedoms. However, absolute return funds still remain relevant to individuals during the accumulation stages of their lives. The same goes for diversified funds, thus providing an element of safety amid a period of high market volatility.
Although past performance is not necessarily a guide to that of the future, the fund’s underlying strategy that has returned on average 7.8 per cent per year, according to BMO, will undoubtedly assure investors that they would be putting money into a credible investment.
