Swip adds to absolute return offering

Scottish Widows Investment Partnership has launched an absolute return fund investing in UK equities and is set to add two further absolute return mandates in June.

The group has also launched a UK real estate fund, which will be exposed to British real estate investment trusts when they become available at the start of next year.

The Swip Absolute Return UK Equity fund, which was soft-launched on May 17, is managed by Robert Waugh, head of UK equities. Investing in between 25 and 35 companies that represent the group’s best ideas, the fund will aim to outperform the London inter-bank offered rate by four percentage points a year.

As the fund has been registered under Ucits III, as well as investing in equities, Waugh can use equity futures, contracts for difference, options and other derivatives to enhance the portfolio’s returns. The fund will carry an initial charge of 5% and an annual management fee of 1.5%. For retail investors, the minimum investment is 1,000.

In June, the group will add the Swip Absolute Return Bond and Absolute Return Macro funds to its offering. The managers for these portfolios have yet to be decided by the group. Similar to the UK Equity fund, the Bond and Macro funds will both be seeded by their founding investors. As well as the absolute return funds, the Swip UK Real Estate fund was launched last week. Part of the group’s Oeic range, it is managed by Nigel Bolton, head of European equities and manager of the Swip European Real Estate fund.

As UK Reits are not yet available, at launch the fund was wholly invested in listed real estate securities, similar to those Bolton holds in the European Real Estate fund.

The European fund has 37.8% exposure to the UK-listed real estate market. The UK fund will hold 25 to 45 stocks.

Bolton says the launch of Reits is likely to increase the size of the UK-quoted sector, and he expects most property investment companies to convert to Reit status from January 2007 onwards.

The fund carries a 5% initial charge and an annual management charge of 1.5% for the retail market, with a minimum investment of 1,000.