Norwich Union is to launch a UK Special Situations fund on May 22, subject to Financial Services Authority approval. The fund will be co-managed by Schroders’ Richard Buxton and Andy Brough.
Buxton, a large-company specialist, has managed Schroders’ 600m UK Alpha Plus fund since 2002. Brough has run the 1.5bn UK Mid 250 portfolio since 1999.
This is the first time the two men have directly co-managed a retail fund, although they are part of the same team, says John Clougherty, sales director for collective investments at Norwich Union.
“I genuinely think they are excited about the fund,” explains Clougherty. “It is an idea they both came up with in response to our tender process.”
“In terms of the stocks and portfolio decision-making, it is a best-ideas process,” he continues.
“The weightings will not be benchmark-driven and will be determined by how stocks rank in the list of ideas. There will be no top-down influence at all. This is a results-based fund.”
On the subject of each manager’s influence on stock selection, Clougherty says decisions will be made by consensus. “There will be debate,” he says. “For instance, there may be a weighting towards Andy’s ideas if they agree.” The fund will hold a concentrated portfolio of 40 to 60 stocks, with about 50 at launch. The fund will be seeded with 200m from Norwich Union’s life and pension funds. This is long-term money that will not be replaced as new cash flowsin, says Clougherty.
Despite the choice of name, Clougherty denies that the fund is aimed at investors who intend to sell out of Fidelity International’s Special Situations, following the departure of manager Anthony Bolton.
“We are not creating the fund specifically to target Fidelity. It stands on its own two feet,” he says. “People are drawing that conclusion but it is not the reason it is being launched.”
The initial charge for UK Special Situations will be 5%, with commission of 3%. Annual management fees will be 1.2%, with trail commission at 0.5%. The minimum lump sum investment is 500, or 50 under a monthly savings plan.