The WAY Group Newsletter for Financial Advisers | August 2010
Sharing both the pain and the gain!
WAY's trio of new funds launched this month are presented with a radical charging structure hitherto unseen in the retail investment market.
In one of the pure growth-play funds, investors can see returns of10% pa before WAY, as fund manager, take an annual charge.
This month WAY launched 3 new funds in our 'themes for the next decade' range. However, the immediate headlines have been taken by the attendant charging structure.
No win/No fee
The fund which has initially opened most eyes is the WAY Freestyle Fund. Managed by Trevor Chanter and supported by the think tank (Star Chamber) team that have delivered sector beating performance across WAY's risk graded Global fund-of-fund portfolios in the first six months of assuming investment management control (Source: Financial Express), the new mandate provides them with an opportunity to craft a pure mixed asset growth vehicle without benchmark constraint.
As with any fund endeavouring to provide investors with good profit opportunity, the risk trade-off will be higher than average but here is where WAY will align our fortunes to that of the clients. WAY will take no annual charge for itself in any year annual period where returns are less than 10%.
There will be a performance fee which will kick-in as gross annual returns exceed this amount in accordance with the following table:-
All fees are applied on the margin. So, to be clear, if the fund were to return 12% gross in any accounting year (April to March) there would be a manager's charge of 10% (12%-10%) = 0.2%.
Trail commission of 0.5% is paid to IFAs exclusive to this calculation so in this example an investor would see an annual management charge of 0.7%.
Clearly, WAY would enjoy a rewarding fee if bountiful returns were achieved but it would be just that... reward for providing the investor with a bountiful return.
The consequence of the above is to truly align the interests of the investor and the investment manager.
Too good to be true?
The nature of the above model is that it answers the criticism so often heaped on the fund management industry in that it/we pocket our fees irrespective of investors fortunes. This voice has risen in recent years as markets have not been too friendly and portfolios have suffered accordingly.
We have sought to present a structure that is both fair and transparent to all but recognise that there will be those that stand back thinking there must be a catch.
Let's be clear, we are a commercial enterprise and our shareholders do not want to be sacrificed on the altar of altruism. Our back-testing informs the obvious - that we will lose money on the fund in bear and flat market periods (because of fixed costs alone) but we do believe that this model is operable on the high alpha and/or volatile funds. It is not something we would contemplate across our entire fund range.
We will lean further on skill and luck to make our return but those are probably the attributes that investors are looking for us to portray.
But what of the funds?
There are three new funds and whilst the Freestyle pricing model described above is the most extreme, the other two are also very keenly priced for their markets (full details are given in the accompanying factsheets - see Associated Links below). The funds are:-
1. WAY Absolute Return Portfolio Fund
Investment Manager: Roderick Collins (Hasley Investment Management LLP).
The very experienced and respected Roderick Collins will be managing a fund of absolute return hedge funds and investment trusts designed to provide a positive return in any twelve month period. The fund will embrace multi-strategies and will be particularly suited as a core holding in low-risk portfolios.
2. WAY Asian Spice Portfolio Fund
Investment Manager: Gabrielle Knights (Wessex Asset Management Limited).
Gabrielle will front the management team from this specialist investment house. Their number includes Peter Chesterfield who will have been followed by many when he managed the Abbey Asian Pacific Trust in the 1980/90s and looked after £1bn+ whilst there. They have been persuaded to run a retail fund for us after concentrating exclusively on institutional management since formation of their company in 1999.
3. WAY Freestyle Growth Portfolio Fund
Investment Manager: Trevor Chanter (WAY Investment Managers Limited).
As previously mentioned, Trevor will manage this high conviction non-correlated fund supported by input from our 'Star Chamber' think tank (please note that of the Star Chamber group, Jason Britton and John Husselbee will not participate to avoid conflict of interest).
Summary
We are very excited by the launch of these three new funds and hope that in tandem with the introduction of the investor empathetic charges you will want to learn more also and consider these for your appropriate clients or portfolios.
Yours sincerely,
Eddie O'Gorman
UK Head of Sales & Marketing
17th August 2010.
References:
1. Data & Statistics - Financial Express
2. Others: Lipper; WAY Fund Managers Limited, Hasley Investment Management LLP, Wessex Asset Management Limited, WAY Investment Managers Limited
– Ends –
Associated Links:
Launch version - WAY Absolute Return Portfolio: Fund Factsheet
Launch version - WAY Asian Spice Portfolio: Fund Factsheet
Launch version - WAY Freestyle Growth Portfolio: Fund Factsheet
Details of WAY Client-centred: Performance Fees
Details of WAY's: Star Chamber
Details of WAY's: Star Chamber Membership
WAY Fund Managers' fund launch: Press Release
Learn more about WAY's: Specialist Funds
How to contact us
We hope you found this article informative and that some of the issues raised will prove useful for developing business with your clients? If you wish to discuss any matters arising from this article or, indeed, want to talk to us about any of WAY's products, then you are most welcome to call either Tony Lyons, IFA Support Manager, or Mark Benson TEP, Technical Manager , on head office telephone number: 01202 890895. Or, if you prefer, you can use the website: Contact Form to get in touch. We look forward to hearing from you.
The WAY Group Newsletter for Financial Advisers | August 2010
Please Note:
This document has been prepared for Financial Intermediary Clients and Professional Associates of WAY Investment Services Ltd and is not intended for and must not be distributed to Private Investors. This document does not constitute investment advice or a recommendation to purchase or sell any security. The investments and services referred to in this document may not be suitable for every investor and if in doubt independent financial advice should be sought. No representation or warranty is given (express or implied) as to the accuracy, completeness or correctness of the information nor the opinions, interpretations and conclusions contained in this document. No liability is accepted whatsoever for any loss howsoever arising from any information in this document subject to the rules of the Financial Services Authority or the Financial Services and Markets Act 2000. Past performance is not necessarily a guide to future returns and changes in rates of exchange between currencies may cause the value of investments to rise or fall. Share prices, values and income can go down as well as up and investors may get back less than their initial investment. WAY Investment Services Ltd is an Appointed Representative of WAY Fund Managers Ltd which is authorised and regulated by the Financial Services Authority.