IFSL Barclays FTSE 100 Trend Fund

Minimum investment:
£1,000

Annual management fee:
1.15 per cent

Initial charge:
4 per cent

Contact:
www.barclayswealth.com

Barclays Wealth Investments has launched the FTSE 100 Trend fund to take advantage of market movements by taking long and short positions on the FTSE 100 Total Return index.

The fund will move to cash if the market is deemed too volatile or if no trends are identified. The fund also features a ‘smart stop’ feature that will be triggered should the index fall by more than 2.5 per cent.

Marc Denton says:
The Barclays Wealth 100 Trend Fund aims to deliver positive, stable returns in a wide range of market conditions, as its sets its sights on benefiting investors both in upward and downwards trending markets.

If the market is in a positive trend the fund will take a long position in its index and in a negative trend the fund will take a short position, if no trend is identified the fund will allocate into cash.

This trigger and switch will happen should the fund lose 2.5 per cent or more of its overall portfolio over five business days, and will stay in cash until the market reverses and rises by 2.5 per cent over five days.

Stock market movement in a five day period as we have seen before could well show much greater volatility than this, with a potential 5 per cent swing being missed on investors’ money.

If the volatility of stock market movement is something that is a worrying factor, I would be very sceptical that investing at all in equity markets would be the right investment route for a client.

Yes, it may be seen as a nice touch to have a built in stop loss, and the Trend fund employs such a smart stop feature, however not being invested and trying to ride waves has shown before that the level of long term growth has been significantly affected.

Equity markets have flatlined recently, with investors finding that long-only strategies come with inherent risks, but they are the only strategies that should be planned.

The next 12 months should be seen as an opportunity to really cultivate a diversified portfolio, not gain a short-term fix.

A slight down turn followed by a prolonged period of growth will provide real opportunity to balance portfolios effectively, and make sure that long term strategies are effectively put in place.

Rating:
Two out of five