Equities do well for Scottish Widows fund

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Equities do well for Scottish Widows fund

With a UK and US equity focus, the Scottish Widows Progressive Portfolio has outperformed its sector with a 31.4 per cent return over the past three years, FE data has shown.

The objective of the £209.6m portfolio, according to its latest factsheet, is long-term capital growth by investing mainly in multi-manager funds, provided by a subsidiary of Aberdeen Asset Management and by the Russell Investment Group.

The fund will invest up to a maximum of 85 per cent in equity funds with a moderate proportion in high-quality fixed-interest securities, including corporate bonds, according to fund managers Mark Henzell and Matthew Davies.

UK equities make up the largest share of the portfolio’s 74.4 per cent equity exposure, followed by the US, at 29.5 per cent. The remaining equity exposures are in Europe, Japan and the Pacific.

The portfolio has a 24.36 per cent fixed interest allocation, with 8.6 per cent in overseas bonds and 4 per cent in UK bonds. Remaining holdings are in money market, at 1.1 per cent; and futures, 0.1 per cent.

Top holdings are the Russell Investments US Equity Fund, at 18.9 per cent; Scottish Widows MM UK Equity Focus, at 13.6 per cent; and Scottish Widows MM UK Equity UK Equity Growth, at 13.4 per cent.

The minimum investment is £1,000, and the ongoing charge is 2 per cent. The fund sits 23rd in the Investment Association’s Mixed Investment 40-85 per cent Share sector.

In the same peer group, the City Financial Multi Asset Growth Fund has tangled with the sector in the past three years, outperforming as much as it has underperformed, but has returned a good 17.69 per cent in that time, according to FE.

The investment objective is to achieve consistent long term capital growth by investing across a global portfolio of assets, its latest factsheet states.

Similarly the portfolio has a large exposure to UK equities, at 45.26 per cent. It has a small fixed-interest exposure, at 6.10 per cent and remaining exposure is in cash, at 24.27 per cent and alternatives, at 15.58 per cent.

In its factsheet, fund manager Mark Harris said that while he can see a short-term rally in equities from heavily oversold conditions, he retains a relatively cautious medium-term view, and continues to place more emphasis on strategies that will protect against significant losses in bond, currency and equity markets.

Top holdings are the Schroder European Alpha Income Fund, at 7.75 per cent; Third Point Offshore Investors Fund, at 5.9 per cent; and Blackrock European Dynamic Fund, at 5.22 per cent.

The minimum investment is £10,000 and the ongoing charge is 2.42 per cent.


Patrick Connolly, financial planner at Somerset-based Chase de Vere, said: “The approach used by the Scottish Widows portfolio provides a good degree of diversification for investors. and by using just those investment managers charges can be kept in check – although a fund of this type will always be pretty expensive. Performance has been competitive in recent years, although it is not as good over the longer term. This is very much a middle-of-the-road type fund in this sector.

“The fund manager of the City Financial Fund Mark Harris is well known, primarily for his time running multi-manager funds at New Star. He took over the City Financial Fund at the beginning of 2013 when it was not a particularly strong performer and, if anything, the comparative performance has deteriorated further since then despite the manager taking close account of peer group holdings. The fund does try to achieve additional diversification and manage risks by adjusting cash balances and holding alternative investments. However, this has not worked so far and with high charges in addition to the poor performance, the fund holds little appeal.”

Scottish Widows Progressive Portfolio City Financial Multi-Asset Growth
Russell Investments US Equity Fund 18.9%Schroder European Alpha Income Fund 7.75%
Scottish Widows MM UK Equity Focus 13.6%Third Point Offshore Investors Fund 5.9%
Scottish Widows MM UK Equity UK Equity Growth 13.4%BlackRock European Dynamic Fund 5.22%
Russell Investments Continental European Equity 8.6%Catco Reinsurance Opportunities 4.21%
Russell Investments US Quant 7.7%Fidelity UK Opportunities 4.70%