A new international equity fund that will be a passive-only version of an existing actively managed fund will be launched by asset manager, T. Bailey, the independent, Nottingham-based investment boutique specialising in multi-manager funds-of-funds.
The new fund will have it’s Total Expenses Ratio (TER) capped at just 0.99 per cent for the fund's leading unit class.
The T. Bailey Growth Fund LITE, which is awaiting FSA approval, will be one of the first passive-only fund of funds to be constructed of ETFs and trackers, and to mirror the asset allocation of an existing actively managed fund.
The T. Bailey Growth Fund is one of the longest-established funds of funds and has delivered top quartile performance since its launch ten years ago (Source: Lipper to 13/12/09). The same asset allocation expertise that has underpinned the success of the T. Bailey Growth Fund will be applied to the T. Bailey Growth Fund LITE.
“Passive investment fans can now have their cake and eat it,” said Philippa Gee, head of marketing and communications at T. Bailey.
“In this fund we're overlaying the global asset allocation and active management expertise of one of the UK's leading fund of funds teams onto an underlay of cost-effective passive instruments.
"Markets are constantly changing and investors can't afford to invest in one place and walk away. When we rebalance the asset allocation of the T. Bailey Growth Fund to enhance returns and reduce risk in response to evolving conditions, we'll do exactly the same with T. Bailey Growth Fund LITE."
She said the fund's leading unit class TER would be capped at 0.99 per cent - less than many are fund managers charge for a simple FTSE-All Share tracker. She said: "Investors can be assured that this TER isn't just an introductory offer that will drift outwards in a few months."
T. Bailey Chief Investment Officer, Jason Britton, who will manage the fund along with Elliot Farley, said: "Passive investing is more complex than is often credited - over the long term many trackers seriously underperform the index they're following, then there are issues of cost, risk and, of course, the challenge of building a sensibly balanced portfolio.
"It's not surprising that many investors just opt for a FTSE-100 tracker. But then they end up with more money in Cadburys or British Airways than in emerging markets. This fund is ground-breaking in that it offers the performance and risk benefits of active portfolio management and the cost savings of passive investing."
The T. Bailey Growth Fund LITE is expected to be launched later this month.
The strategic asset allocation at launch, like that of the T. Bailey Growth Fund, is: UK 25 per cent, US 25 per cent, Emerging Markets 17.5 per cent, Europe (ex UK) 15 per cent, Japan 7.5 per cent and Pacific Basin (ex Japan) 10 per cent.
