Multi-manager  

Close fund steers clear of EM

Close fund steers clear of EM

Ranked sixteenth in the IA Mixed Investment 20-60 per cent sector, the Close Managed Diversified Income Fund has scooped a return of 15 per cent over the past three years, according to FE data.

By comparison, the sector has delivered a return of 10 per cent since February 2013.

The £57.9m fund, which aims to have a yield in excess of the FTSE All Share Index, invests largely in exchange-traded funds and third-party collective investment schemes.

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Half of the portfolio is exposed to equities, of which approximately 18 per cent is invested in UK companies. A quarter of the portfolio is invested in fixed interest assets, with alternatives and money markets making up the rest.

Fund managers Matthew Stanesby, Sam Grant-Dalton and James Davies never invest more than 5 per cent in any one holding, with Schroder Strategic Credit and Fidelity Strategic Bond comprising no more than 4.3 per cent of the portfolio each.

Typical investors in the fund are looking for an investment that provides capital growth with some income.

The minimum initial investment is £1,000 and the annual charge is a modest 1.1 per cent.

However, according to the fund’s latest factsheet, the proportion of the charges for this fund are currently being subsidised, which may have an adverse impact on the ongoing charge.

The Allianz RiskMaster Conservative Fund, which sits in the same peer group, has delivered a modest return of 1.1 per cent over the past three years, FE figures reveal.

Ranked 109th in the sector, a fifth of the portfolio is exposed to emerging market bonds and equities, while 38 per cent is invested in global equities.

According to the fund’s latest factsheet, the £22.7m fund hopes to achieve long-term capital growth by maintaining a balance between investments that are considered low to medium-risk, and those considered higher-risk.

The team lean heavily towards bonds, with approximately 45 per cent of the portfolio allocated to this asset class.

In bonds, the team sees a steady interest income and capital gain opportunities on declining interest rates.

According to Morningstar, the fund’s top holdings are in S&P 500 Emini Futures at 18.9 per cent, iShares Core UK Gilts at 18.4 per cent, and iShares JP Morgan Emerging Markets at 17 per cent.

The minimum initial investment is £500, according to FE, and the annual charge is 2.17 per cent.

Close Managed Diversified IncomeAllianz RiskMaster Conservative Fund
1. Schroder Strategic Credit 4.3%1. S&P 500 Emini Futures 18.9%
2. Fidelity Strategic Bond 4.3%2. iShares Core UK Gilts at 18.4%
3. BlackRock Continental European 3.9%3. iShares JP Morgan Emerging Markets 17%
4. Fidelity Global Enhanced Income 3.8%4. US Treasury Bill 16.8%
5. SLI European Equity 3.8%5. UK Government 15.1%

Adviser View

Gordon Bowden, director of Quainton Hills Financial Planning, said: “The Close Managed Diversified Income Fund is an unfettered fund of funds. It has considerable investment flexibility and it has consistently outperformed its sector average. It has benefited recently from having no exposure to emerging markets.

“It should be noted that the annual charges are currently subsidised so investors should review matters regularly to ensure that charges do not become excessive in the future.