Seer Green Financial Planning’s investment team has reduced exposure to Nick Train, Terry Smith and Neil Woodford’s funds to make room for the popular SDL UK Buffettology vehicle.
Matthew Bird, an independent financial planner, said his firm added Keith Ashworth-Lord’s Buffettology product to its model portfolio range in January, after the vehicle’s growing scale allowed fees to drop.
“It’s one we have been looking at for quite some time,” he said.
“The thing that was putting me off was the ongoing charges figure (OCF). When the fund was smaller it was quite high, but it has come down quite considerably as it has grown.
“They now have a good five-year track record, so you should see further inflows that bring the OCF down.”
The fund, which launched in 2011, has now grown to £150m following a period of consistent outperformance. The strategy has more than doubled the average return from its IA UK All Companies peer group over both three and five years, data from FE Analytics shows.
Mr Bird introduced a 7 per cent position in the fund for higher-risk clients, using money taken from higher-profile offerings.
This involved reducing exposure to Neil Woodford’s Equity Income fund, as well as to a Fundsmith Equity strategy. While the first reduction was merely to help “make way” for the Buffettology position, the latter was also related to concerns about US valuations.
“Fundsmith has a large exposure to the US,” Mr Bird said.
“That has started to look a little bit toppy. Woodford Equity Income is a fund I’m sticking with at the moment. The dividend is decent and I think there’s more chance of capital growth.”
The firm also helped to fund the Buffettology position by selling out of Lindsell Train UK Equity. This move financed another new position, in Lindsell Train’s Global Equity offering.
“[Lindsell Train UK Equity] was a long-standing position and we are happy with the performance and the team,” Mr Bird explained. “But at the same time, we have been looking at the sister fund, which has been outperforming.
“We like their investment method and how they pick shares. Generally it’s better to give them a remit of the entire planet than just the UK.”
Equities represent 67.5 per cent of Seer Green’s Balanced portfolio.
In fixed income, which makes up around 20 per cent of the portfolio, the team is unsure whether to keep using active managers. The firm currently uses Henderson’s Strategic Bond fund and the L&G All Stocks Gilt Index Trust vehicle.
“There are statistics showing that active bond funds aren’t worth paying the fees, 99 per cent of the time,” said Mr Bird.
“In the case of the Henderson fund, they have been worth paying for. But there’s no guarantee that continues. Going passive [to a greater extent may] be better.”