Sarasin is launching a UK Thematic Opportunities Fund on 28th January 2010. The group has been investing on a thematic basis for over 20 years across various global funds and is now looking to apply the same strategy to a UK fund.
The UK market is home to an increasing number of international companies and this fund offers investors a way to benefit from the growth in the global economy. Given that two-thirds of revenues in the UK stock market are thought to be generated overseas, Sarasin believes the UK needs to be viewed in a global context.
The fund will be managed by Rohini Rathour, who has 14 years’ investment experience. Her philosophy is that a company’s geographical location is largely irrelevant; instead she aims to deliver attractive returns from a portfolio of around 40 to 50 companies selected on the basis of investment themes. A concentrated portfolio can increase the risk, so the fund will fall in value as well as rise and a long-term investment horizon is essential.
At launch there will be five different themes in the portfolio:
These themes can evolve and change over time. This investment approach is well-established, and sets Sarasin apart from most traditional equity fund managers. Whilst it has been applied to global funds before, it will be interesting to see how it works in this UK fund.
Please note that this fund also has the ability to use wider investment tools which may include shorting (please see below for an explanation). The fund also has an annual charge of 1.5% and a performance fee of 15% of any positive outperformance of the FTSE All Share Index (please refer to the prospectus for full details). On the whole we do not like performance fees as we could argue any active manager should be able to deliver a positive return.
The fund is not currently on the Wealth 150 list of our favourite funds in each sector, as we would first like to assess how its strategy operates in practice before considering it for inclusion.
Meera Patel, Senior Analyst
Key features of the Sarasin Equisar UK Thematic Opportunities Fund
Prospectus of the Sarasin Equisar UK Thematic Opportunities Fund
The UK market is home to an increasing number of international companies and this fund offers investors a way to benefit from the growth in the global economy. Given that two-thirds of revenues in the UK stock market are thought to be generated overseas, Sarasin believes the UK needs to be viewed in a global context.
The fund will be managed by Rohini Rathour, who has 14 years’ investment experience. Her philosophy is that a company’s geographical location is largely irrelevant; instead she aims to deliver attractive returns from a portfolio of around 40 to 50 companies selected on the basis of investment themes. A concentrated portfolio can increase the risk, so the fund will fall in value as well as rise and a long-term investment horizon is essential.
At launch there will be five different themes in the portfolio:
- Corporate restructuring – focuses on companies which are restructuring their businesses to increase future profit potential.
- Intellectual property and excellence – looks to identify companies which have the ability to protect their intellectual property (such as good customer relationships and the intellect of people within a company) to help it innovate.
- Pricing power – looks for companies whose strong market position allows them a degree of control over the price they charge for their product.
- Security of supply – focuses on companies well-placed to benefit from increases in the price of natural resources and other basic necessities which are in short supply.
- Strong get stronger – focuses on the outcome of the credit crunch, where financial strength has been a key driver of survival.
These themes can evolve and change over time. This investment approach is well-established, and sets Sarasin apart from most traditional equity fund managers. Whilst it has been applied to global funds before, it will be interesting to see how it works in this UK fund.
Please note that this fund also has the ability to use wider investment tools which may include shorting (please see below for an explanation). The fund also has an annual charge of 1.5% and a performance fee of 15% of any positive outperformance of the FTSE All Share Index (please refer to the prospectus for full details). On the whole we do not like performance fees as we could argue any active manager should be able to deliver a positive return.
The fund is not currently on the Wealth 150 list of our favourite funds in each sector, as we would first like to assess how its strategy operates in practice before considering it for inclusion.
Meera Patel, Senior Analyst
Key features of the Sarasin Equisar UK Thematic Opportunities Fund
Prospectus of the Sarasin Equisar UK Thematic Opportunities Fund
Shorting – an explanation
Traditionally investors buy assets they believe will rise in value. Shorting is different.
The principle is that the fund manager actually sells shares they don’t own. This in effect means he owes the buyer the shares. The buyer agrees they will not take delivery of the shares for, say, six months and the fund manager hopes that by then the share price will have fallen. After six months the fund manager purchases the shares in the market and passes them on to his buyer. The difference between the two prices is the profit or loss. For example:
1. Fund manager sells short 10,000 shares at £2 each = £20,000
2. Purchase these shares six months later at 80p each = £8,000
3. Profit = £12,000
In this example had the share price risen by the same amount, it would have cost the manager more to purchase the shares than they made from selling them and they would have made a £12,000 loss. There are many ways of effecting this investment strategy and managers may short by entering into contracts with a broker and not actually take delivery of the shares. Therefore this is not an exact description of how it happens, and ignores transaction and other costs, but it hopefully explains the principle.
Traditionally investors buy assets they believe will rise in value. Shorting is different.
The principle is that the fund manager actually sells shares they don’t own. This in effect means he owes the buyer the shares. The buyer agrees they will not take delivery of the shares for, say, six months and the fund manager hopes that by then the share price will have fallen. After six months the fund manager purchases the shares in the market and passes them on to his buyer. The difference between the two prices is the profit or loss. For example:
1. Fund manager sells short 10,000 shares at £2 each = £20,000
2. Purchase these shares six months later at 80p each = £8,000
3. Profit = £12,000
In this example had the share price risen by the same amount, it would have cost the manager more to purchase the shares than they made from selling them and they would have made a £12,000 loss. There are many ways of effecting this investment strategy and managers may short by entering into contracts with a broker and not actually take delivery of the shares. Therefore this is not an exact description of how it happens, and ignores transaction and other costs, but it hopefully explains the principle.
