Allianz to convert High Alpha fund

Allianz Global Investors (AGI) is to convert its Allianz RCM UK High Alpha fund into the new Allianz RCM UK Unconstrained fund.

The new fund, which will be managed by Mark Lovett, will aim to capture the best opportunities across large-, mid- and small-cap British equities.

Lovett will seek to ­create a portfolio of 16 to 30 of the best stocks in the market.

Allianz says it developed the fund in response to client demand for more concentrated portfolios and higher levels of performance.

Lovett says the new fund will not be constrained by large constituents of the index.

“Its concentration means that conviction positions can make a real difference,” he says. “This is a great opportunity for investors to benefit from genuine active management and to tap into the very best stocks from across the FTSE 350 and small cap space.”

Allianz expects the change to take place on October 8. However, the decision is still subject to shareholder approval.

The existing £10.8m Allianz RCM UK High Alpha fund was launched in May 2004. Lovett has managed the fund since its launch. He usually holds between 25 and 50 stocks.

“While the macro environment in the UK is expected to be subdued for the next two to three years, the outlook for the UK equity market is very different, and offers some attractive opportunities,” the manager says.

The charges of the new Allianz RCM UK Unconstrained fund will remain the same as on the High Alpha fund. There is a 1.5% annual charge and a 4% initial charge.

Nick Smith, a managing director of Allianz Global Investors Europe, says the decision to convert the fund was supported by a recent survey among 194 professional advisers on the Allianz Global Investors database.

“Over 95% of advisers believe that it is important for fund ­managers to have the ability to implement their convictions or best ideas without restriction,” Smith says.

According to Morningstar, over three years to September 14 the Allianz RCM UK High Alpha fund was ranked 225 out of 277 funds in the IMA UK All Companies sector. This follows a fall in the fund’s value of 13.1%, against the sector average decline of 5.3%.