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Old Mutual Global Best Ideas Fund - removed from Wealth 150

Richard Troue | Thu 26 February 2015

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.

The Old Mutual Global Best Ideas Fund has been removed from the Wealth 150 list of our favourite funds across the major sectors.

The best ideas concept was launched by Skandia (subsequently acquired by Old Mutual) in June 2006. Its aim is to provide exposure to some of the most highly-regarded fund managers in the industry, with each manager contributing up to ten of their highest conviction ideas to the portfolio.

At the time most of these managers were already represented on our Wealth 150. We felt the best ideas concept would be an excellent way for investors to access their talents. As a result, we had high hopes for the fund.

Performance has not lived up to our expectations, while the fund has undergone changes which do not appear to have benefited investors. In December 2012 the fund moved from having approximately 50% allocated to the UK and 50% overseas to having around a third invested in North America, a third in Europe (including UK) and a third in higher-risk Asian and emerging markets.

This means since the changes have been made, and when compared with the benchmark MSCI AC World Index, the fund has had a much lower weighting to the US (one of the best performing global stock markets over recent years) and higher exposure to Asia and higher risk emerging markets (which have performed less well). This has presented a significant headwind for the fund. Since December 2012 the fund has grown by 29.8% compared with 40.8% for the MSCI AC World Index and 34.1% for the average fund in the IA Global Sector although past performance should not be seen as an indicator of future returns.

Since Lee Freeman-Shor assumed responsibility for the fund in January 2010 he has done a reasonable job. However, given the track record and pedigree of the underlying managers, we would have expected stock selection to have a more positive impact on returns. This leads us to believe that the 10 stock best ideas concept is not necessarily the best way for investors to access the underlying managers' stock picking abilities. Overall, the fund has underperformed the MSCI AC World Index since launch, as shown below, while it has also been more volatile than the peer group and index. Derivatives can be used by the managers which can accordingly increase risk.

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Performance since launch

Annual percentage growth
Feb 10 -
Feb 11
Feb 11 -
Feb 12
Feb 12 -
Feb 13
Feb 13 -
Feb 14
Feb 14 -
Feb 15
Old Mutual Global Best Ideas 30.16% -6.59% 17.83% 9.36% 9.36%
IA Global 17.76% -3.80% 13.27% 9.94% 12.23%
MSCI AC World 19.31% -1.45% 15.66% 6.66% 19.60%

We stress this should not be taken as a signal to make any changes to a portfolio - investors should make their own decisions about whether or not a fund remains suitable for their personal objectives. The fund continues to provide exposure to a number of high-quality managers. That said, for the reasons outlined above, we have higher conviction in the remaining Wealth 150 funds. Investors looking to invest new money into the global sector might wish to refer to the Wealth 150. We offer an advisory service for investors who are unsure of the suitability of an investment.

Find out more about this fund including how to invest

Please read the key features/key investor information document in addition to the information above.

The value of investments can go down as well as up, this means you could get back less than you invested. Therefore all investments should be regarded with a long term view. No news or research item is a personal recommendation to deal. If you are unsure about the suitability of an investment please contact us for advice.
Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.


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