Experienced investors should already have well-rounded portfolios, but might be prepared to add specific industry-sector funds or even single-country equity exposure. This could give them the extra style bias they want to help them to achieve additional growth potential during the next phase of the economic cycle. |
Funds with the potential to make money in both rising and falling markets are likely to attract the same target audience that with-profit funds used to. But investors must always make sure that they are comfortable with everything their fund invests in and also that, as far as possible, they understand what the fund actually does. That way there are less likely to be any disappointments. |
Investors will need to be aware that some target return funds quote their intended returns gross of fund charges, which means that, after the fund's expenses have been accounted for, they are likely to get a lower return than the target rate. They should also remember that the higher the charges, the higher the initial hurdle the manager will need to overcome in trying to meet the target return. |
The concentration of stocks is concerning. An active fund manager would not put a portfolio together simply based on how big a company is or how big a portion of the index it represents. I would prefer to invest with a manager with a high degree of conviction in what they think are the best opportunities for growth. |
This is run almost like a special situations fund. |