Fund of the month – March 2010

Aberdeen Emerging Markets

 

Fund Aims:

To provide long term capital growth from direct or indirect investment in emerging stock markets worldwide or companies with significant activities in emerging markets.

About the fund:

Fund Size: £1.2bn

Launch Date: March 1987

Sector: Global Emerging Markets

About the sector – Global Emerging Markets

This sector encompasses 35-plus funds which invest 80% or more of their assets directly or indirectly in emerging markets, as defined by the World Bank, without geographical restriction. Funds should be broadly diversified across a selection of countries, regions and asset classes.

The growth levels experienced over recent years have made emerging markets increasingly favourable for risk tolerant investors seeking capital gains. Despite the credit crunch and the global financial problems of 2008-2009, all but one of the sector constituents remained in positive territory, and in many cases investors have reaped substantial gains.

As expected, a price must be must be paid for the high returns, with this grouping being one of the most volatile of all sectors: this risk indicator ranges between 20 and 32 percent, and so investors should be prepared for a long hold in order to ride out the variability in returns.

The point for investors, though, is whether the elevated degrees of volatility are being rewarded. A familiar risk-adjusted gauge is Sharpe Ratio, which calculates the amount of return generated for each unit of risk, and all of the funds here have historically delivered positive results.

Emerging markets funds can certainly lay claim to a place in a well-informed investor’s portfolio. The sheer diversity, the rate and nature of development in the target economies, and the potential rewards make for a compelling long term proposition.

Source of information: Financial Express

About the manager

The fund is managed by Aberdeen’s global emerging markets team as opposed to one specific fund manager. The upside of this is that it is less exposed to changes in personnel over the long term. The Trustnet verdict on the management team is that overall, they are performing better than the peer group composite. Over a long track record, the manager has outperformed the peer group more often than not.

Source of information: Financial Express

Comments

The fund has been the best performer over the month with a return of 9.89%*. This is the highest return of any fund across all of our portfolios. The fund has also been a good performer over the last 12 months returning 84.34%* and this performance was rewarded in March as it scooped the “best emerging markets equity fund 2010” at the Morningstar fund awards.

As stated in the “about the sector” section above, the Sharpe Ratio (the return generated per unit of risk) performed. In this case the Aberdeen Emerging markets fund has a Sharpe Ratio in the top quartile, meaning that the risk vs. the return of the fund is good in relation to its peer group.

General sentiment towards the sector has been reasonably positive with Threadneedle and Invesco Perpetual both stating that there are opportunities to be sought provided that investors are comfortable with short term volatility.

*Source of data: Morningstar 1/4/2010

Monthly Fund Blog

 

Monthly fund Blog

29^th March 2010

The Reeves Portfolio’s have had an encouraging month on the back of growth in stock markets. The portfolio’s were reviewed and changed during the month of February and March saw the first full month of performance data.

There were a range of performers across all portfolios with 6 funds returning over 10% between 26/02/2010 and 26/03/2010.

Most encouragingly for the portfolio’s was that both the Balanced and Aggressive Portfolio outperformed Financial Express’ Adviser Fund Index. In the words of financial express the Adviser Fund Index, “is made up of the recommended portfolios of a panel of leading UK financial advisers. Based entirely on the funds actually recommended to clients, the AFI Aggressive, Balanced, Cautious portfolios carry real-life credibility, and provide insight in terms of the benefits of holding top quality funds.”

This out performance is encouraging even with growth in stock markets over the period.

3 month performance has also been pleasing, with the aggressive fund outperforming the FTSE 100 index and the balanced portfolio falling only 0.25% short.

The performance of the balanced portfolio is very pleasing given the lower level of risk within the portfolio in comparison to the FTSE 100 over 3 months.

The top three performers across the three portfolios were as follows:

Fund Manager	Fund	Performance
Aberdeen	Emerging Markets	11.83%
Schroder	US Small Mid Cap	10.86%
Investec	American	10.84%

Information provided by Morningstar 26/03/2010

The effect of any charges on the performance levels would be to reduce the total growth generated below those detailed above.

The information in this publication is intended to provide general information and does not represent a personal recommendation of any product or provider. The value of investments can fall as well as rise and you may not get back the full amount invested. Past performance is not a guide to future returns. The sections within this leaflet are opinion only and do not constitute advice. Other charges may be applicable and are subject to change without prior notice. Please refer to our brochure for information on our other products and services. Minimum Investment levels vary from fund to fund. This product is available through a variety of products including Unit Trusts, Bonds, Pensions, ISA’s, SIPP’s and WRAP’s. Cancellation rights vary from product to product. Clarification should be sought on this matter before you invest. Tax treatment will also vary from product to product.

One of the major players in buy to let lending, Paragon have announced hopes to increase buy-to-let lending.

• Source : Dominic Welling,  FTAdviser , Published Friday , January 22, 2010

The Paragon Group has revealed it is increasingly confident about starting up new lending again in the buy-to-let market, as funding conditions have continued to improve.

Paragon revealed it was hopeful funding could improve soon.

“While these are early days recent improvements in funding markets will encourage us to look more confidently to reinstating the funding programme to support new lending going forward.”

The group also reported it does not expect to see a material increase in competition in the buy-to-let market for some time and redemption rates were therfore likely to stay low for foreseeable future.

The report said: “With demand for private rented property expected to remain high an increase in unsatisfied mortgage demand, particularly from professional landlords, is anticipated going forward.”

Reeves Independent have wealth of experience in’ buy to let’ and through property investment academy limited help and advise clients to build property investment portfolio.

MARKET UPDTATE

15^th January 2010

Time to consolidate?

A large proportion of our investors have seen large gains over the last 12 months – particularly, but not limited to, those invested within our more speculative ‘aggressive portfolio’. A large proportion of this portfolio is invested in Asia and emerging market funds and as a consequence can face periods of high volatility.

 The Asian market was hit by heavy selling earlier this week after the Chinese central bank surprised many by raising the proportion of deposits that banks must hold in reserve. This had consequences both within the region and internationally, with the FTSE also dropping below the 5,500 mark partly on this news.

Markets have started to show signs of recovery since, however sentiment is somewhat cautious, partly because China is due to release key economic indicators next Thursday.

With this in mind we have been in touch with some of our investors who have seen strong growth in their portfolio to discuss the possibility of consolidating these gains. If you would like to talk to us about consolidating or generally reviewing your investments please call us on 0871 271 1280.

This email is intended to provide general information and does not represent a personal recommendation of any product or fund. The value of investments can fall as well as rise and you may not get back the full amount invested. Past performance is not a guide to future returns. The sections within this email are opinion only and do not constitute advice. Charges may be applicable and are subject to change without prior notice. Please refer to our brochure for information on our other products and services.

The latest Government plans for Company Pension Schemes

It looks like personal accounts are going to brought in by the government although yesterdays announcement is going to delay things by a year. This is the follow up to the flawed stakeholder schemes. It is reported that the introduction of this will go ahead despite any change in government.

Key Issues for employers:

• As of 2012 all employers will need to set up a pension scheme for all staff*
• All employers will need to fund at least 3% of earnings for every member of staff. (contribution are to be phased  in and are still under consultation)
• Every employee* will be automatically ‘signed up’’ into the company scheme.
• The scheme will be administered by all companies.
• There will be no waiting period – all employees will join day one.
• Every company will need to set up a government  ‘personal account’ scheme for their staff or an acceptable alternative.
• No commissions are payable to advisers through the governments scheme – advice costs will be paid by the employers to their advisers.

 

* The only exemptions will be low earners (around £5k per year) but even these people will need to be offered entry to the scheme.

Key Issues for employees:

• Every employer will need to offer a personal account scheme or alternative.
• All schemes will involve an employer contribution of at least 3% of earnings.
• All schemes will require a total contribution of 8% of salary. This made up of the employer contribution and the employer contribution.
• Tax relief will be available on the contributions for both employer and employee. (The employer contribution will be able to offset as a business expense of course, but the tax relief for the employee is given by the way of 1% Government contribution)

 

Key facts about the Governments ‘Personal account’ pension plan:

 

• Retirement dates will be the same for every one – set by the government
• The personal account will be run by a new organisation set up by the government
• There will be no investment choice – it will be managed by the governments body
• There will be no transfers in or out. Once the money is invested in the scheme you have no choice or options.
• All companies will have the option to set up an alternative scheme that will need to meet certain criteria. These schemes will provide flexible retirement dates to suit individual needs, choice of investment options, options of transfers and other features that are familiar today.

 

Reeves Independent Services

 

• We will continue to provide advice to our company clients with regards employee benefit programmes.
• We will ensure existing schemes meet the criteria.
• We will help new company clients set up the scheme in the best way to suit.

 

The above information is based upon the latest information and details are subject to change.

Weekly Portfolio Report – 10/12/2009

This week has been a rather turbulent one for the Reeves’ Portfolio’s.

This has come off the back of negative market news at the beginning of the week, particularly over concerns that UK banks could be overexposed to Dubai debt and the news that bankers would be subject to a one off bonus as part of the Chancellors pre-budget report.

However, it has not been all doom and gloom with Reuters reporting that the FTSE has gained 51% from its six year low in March 2009.  Similarly global markets have shown an upwards trend at the time of writing.

 

Opportunities in America?

The pick of the funds this week is the Schroder US Mid-Cap Fund which has provided a 1.96%* return for the week. So far this year, the fund has achieved a 23.65%* return.

This is a relatively new fund, launched in 2005, however it has already achieved a AAA rating from Old Broad Street Research. It has also achieved top quartile ratings on a 1 and 3 year basis**. The funds investment objective is to provide capital growth and income through investment in equity securities of smaller and medium-sized US companies. As investments in smaller companies can be less liquid than investments in larger companies price swings may therefore be greater than in larger company funds. Similarly funds that invest solely in companies of one country or region can carry more risk than funds spread over a number of countries or regions.

Although investors should remain cautious there are some good opportunities in the North American market. Here are some updated comments on the market:

• “The outside view is 7% to 8% GDP growth for 2010 (in North America), which is miles outside the consensus. The consensus forecast is inconsistent with the data flows we’re getting, and with history. The probability of growth being higher than 2.6% is much higher than the market believes, and the probability of it being lower than what the market believes is much lower.” (Bill Miller, Legg-Mason, Fund Strategy 9.12.09)***
• Equities in general are set to outperform, with valuations at attractive levels, the manager says. “Money is pouring out of equities and into bonds in the US—we are seeing the highest inflows ever. People tend to follow trend and outlook not valuation, but valuation right now is all in favour of equities rather than fixed income. (Bill Miller, Legg-Mason, Fund Strategy 9.12.09)***
• Ultimately a period of stable conditions, excluding the decline in the property market, could lie ahead, and it is inconceivable that the US will not be a key participant in the beneficial effects of ongoing globalisation with growing rates of Foreign Direct Investment coming from this sector into emerging economies. ****

The Schroder US Mid-Cap fund is currently one of 9 funds within The Reeves Independent Aggressive Portfolio which is available to our clients through our WRAP management system. Clients are able to manage their ISA’s, Pensions, Unit Trusts and Bonds through the WRAP system.

Sources of date:

*Morningstar 11.12.2009

**Trustnet Analytics 11.12.2009

***Fund Strategy 9.12.2009

****Financial Express Analytics

Other sources of data:

Schroder US Mid-Cap Fund Fact Sheet

Reuters News Agency

BBC News Market Data

This fact sheet is intended to provide general information and does not represent a personal recommendation of the product. The value of investments can fall as well as rise and you may not get back the full amount invested. Past performance is not a guide to future returns. The sections within this fact sheet are opinion only and do not constitute advice. Other charges may be applicable and are subject to change without prior notice. Please refer to our brochure for information on our other products and services.

Reeves Independent Portfolio Fact Sheets

Dear All

At Reeves Independent we have 3 Investment Portfolios that clients have the choice to invest in. They may invest in just one or split their money into the various portfolios avaialble. We feel it is vitally important to review these portfolios on a regular basis to ensure our clients are investing their money in the right funds available.  Below are the fact sheets for our updated portfolios

aggressive fact sheet 19 11 2009

balanced fact sheet 19 11 2009

cautious fact sheet 19 11 2009

Feel free to comment on the fact sheets – we would welcome your feedback

Nigel Reeves

Reeves Independent’s Blog No.1

This week has been a decent week for The Reeves Portfolio’s.

The pick of the week has been Gartmore’s China Opportunities Fund which has provided a 3%* return for the week. So far this year the fund has achieved a 51.88%* return.

This is an established fund (launched 1983) and has achieved top quartile rankings over the last 10 years. The fund may invest in emerging markets, smaller companies and more generally tends to invest within a single market. As a consequence, this type of fund is at greater risk from political and economic factors. Similarly it may be subject to more abrupt price movements than one would be used to within a more traditional UK Equity based fund. Having said this, in exchange for higher volatility an investor should hope to be exposed to greater opportunities for increased returns. Despite the funds name 92% of the share holdings are held within Hong Kong Exchange. 38%** of the funds are currently invested in financials, with a further 11%** in IT and Energy.

There is strong support for investing some money into China – the following text is taken from an article written by Allianz Global Investors***:

• Very aggressive and decisive government policy support has ensured that China is practically the only one of the world’s largest economies currently expanding strongly and the likelihood has increased of 8% real gross domestic product (GDP) growth in 2009.

• A very strong fiscal position and loan growth at more than twice the rate of nominal GDP growth are boosting fixed asset investment which is likely to remain the key driver of economic growth for the next couple of years.

• China’s comparative economic health means spending has focused on infrastructure, the foundation for future economic growth – not on rescuing the financial sector, as elsewhere.

• Through strategic international acquisitions currently, China should emerge from the global downturn even stronger.

• Encouragingly, policies are being implemented to boost longer-term domestic consumption – the key to higher quality, long-term growth.

The Gartmore China Opportunities fund is currently one of 9 funds within The Reeves Independent Aggressive Portfolio which is available to our clients through our WRAP management system. Clients are able to manage their ISA’s, Pensions, Unit Trusts and Bonds through the WRAP system.

*Source of data: Morningstar

**Source of date: Providers own fact sheet as at 31.10.2009

***Source of data: Allianz Global Investors, “China: Building the foundation for long-term economic growth.” Oct 09

 

This fact sheet is intended to provide general information and does not represent a personal recommendation of the product. The value of investments can fall as well as rise and you may not get back the full amount invested. Past performance is not a guide to future returns. The sections within this fact sheet are opinion only and do not constitute advice. Other charges may be applicable and are subject to change without prior notice. Please refer to our brochure for information on our other products and services.