As a limited issue portfolio the fund launches at the end of July with 75 million units. It can potentially charge more in management fees than the 4% initial and 1.5% annual levied on the firm’s other multi-manager offerings. However, it is not intending to incorporate a performance fee structure.
A non-Ucits product, the vehicle, which will contain between 20 to 30 funds, can pick from a wide investment universe though it will not look to buy in any investment trusts.
As its managers, Gary Potter and Robert Burdett, have the ability to invest heavily in new products many of the funds held will be less than two years old and, while typically they will be less than £100m in size, many will be under £50m.
Burdett said years of fund selection experience has shown a fund’s best performance is often to be found during its early years when its manager attempts to build a track record. This means, as the portfolio is to have a UK bias, it will potentially invest in the likes of Unicorn Free Spirit, New Star UK Special Situations, Majedie UK Opportunities and Rensburg UK Micro Cap Growth.
Each of these funds fits the investment criteria in that they range in size from £18m to £80m and have all shown strong outperformance in the few years since they were launched.
Unicorn Free Spirit, which launched in December 2001 under the management of Peter Webb and is now £18m in size, has consistently outperformed the UK All Companies sector returning 22.97% bid to bid between 28 June 2002 and 30 June 2003 against a mean of -7.58%, according to data from Lipper.
Over the following two years its growth was 38.55% and 17.12% against means of 17.32% and 16.4% respectively.
Similarly Adam Parker’s £80m Majedie product, which is in the top 10 holdings of Potter and Burdett’s existing Constellation and Equity Managed funds, has also shown strong outperformance since its launch in March 2003.
The new product will not be limited to UK only funds. It has the ability to enter any geographic region in the world and could look at new launches such as Britannic Argonaut European and JO Hambo Capital Management’s forthcoming UK fund.
As well as boutique products it will be investing in funds from major investment houses and, because the portfolio has been limited in size to £75m, its managers said it will be able to take big enough positions to impact performance.
The new launch takes the total number of multi-manager products offered by CSAM to 16.