Broker Review | WAY Hasley Global Momentum Fund | June 2011

Image: MoneyMarketing Broker Review.

The WAY Group and Hasley Investment Management have teamed up to launch this fund that moves between developed equity exchange traded funds and cash using a computer based trading system devised by academics at the Cass Business School. The fund offers exposure to 24 developed equity markets through an equally weighted portfolio of 14 exchange traded funds.

Putting the fund into its market context, Fraser Financial Services managing director Ray Fraser says: "The inconsistent behaviour of equity markets over the last decade has exerted additional pressure on IFAs such as myself to arrive at a formula for managing client investment portfolios in a cost-effective and disciplined fashion in addition to providing good financial advice." Fraser says there are a number of very good fund managers out there but the time spent on monitoring performance, current asset allocation and the merry-go-round of fund manager moves cannot provide any guarantee that the resulting findings will lead to superior portfolio returns.

He says: "I have watched the development of passive funds and can relate to the fact that, over the longer term, they can provide a good proxy for market returns allied to a keener pricing structure. The problem they hold for me is that they follow markets down as well as up.

"This new fund seems to deal squarely with this objection. It uses a series of 14 ETFs to cover the developed world markets and remains in those markets while the price trades above its moving 12-month average. When the price dips below at its monthly review point the fund exits the market for cash."

Fraser says that in simple terms, when equity markets are rising the fund is participating in that rise. "When the same markets fall below their own moving average, then you are in cash. This looks like a very good disciplined way to run the core equity component of an investor's portfolio and is a straightforward message to convey to clients," he says.

Fraser feels the formula used to determine that market participation is robust. "In that regard, it is interesting to see the involvement of the Cass Business School both in the academic research that paved the way for the fund plus the development of the trading system which will be applied. Reassuringly, it is stated that the two professors at the heart of the research will continue to have a role to play, ensuring that the system does not become outmoded."

The trading process is mathematical, mechanical and devoid of human intervention, which makes it is possible to produce reliable backdated simulations for a trend momentum process of this nature, according to Fraser. "The results are impressive. Over the erratic 10-year period to the end of 2010, an investment of £100,000 in to the World MSCI index would have turned to £121,000 and the trend momentum model would have realised £190,000. This is achieved by significantly reducing the volatility and depth of drawdown that a buy and hold investment strategy would reap."

Fraser thinks the fund is a very beneficial development in the retail investment market and that it will be well received by IFAs and their clients. Turning to potential drawbacks of the fund, Fraser says: "I have no adverse thoughts toward the fund itself. But it might be interesting if the company developed a mixed asset model that would offer a complete core holding to a portfolio."

Identifying the main competition, Fraser says: "On a broad level, I could see that the fund might be compared as an alternative to managed funds or funds of funds in establishing the central plank of a portfolio construction. However, I think in reality there is a big strategic difference in that managers of these offerings are continually making calls on asset allocation and market timing which the global momentum fund avoids." Fraser adds that the natural competition is the growing realm of passive funds. "The competitive edge this fund embodies is the disciplined formulaic approach to exiting a sliding market. This rather makes it an active passive fund."

Summing up, Fraser says: "WAY has a reputation for innovative products and the Hasley team it has collaborated with to bring the fund to market is well experienced so this does look like a strong and reputable combination.

- Ray Fraser -

Please Note:
The above analysis/broker review by Ray Fraser, Managing Director of Fraser Financial Services, first appeared in MoneyMarketing on 14th April 2011. Reproduced with kind permission.

References:
Data & Statistics - Hasley Investment Management LLP

Associated links:

Plan Details: WAY Hasley Global Momentum Fund

Website: Cass Business School (City University London)

Website: Hasley Investment Management LLP

Website: Paul Wilcox's Blog - The Last Crusade

Analysis/Broker Review: Upward Momentum
(Reproduced with the kind permission of MoneyMarketing)

How to contact us

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.

Broker Review | WAY Hasley Global Momentum Fund | June 2011

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. 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.