This fund gives investors access to a range of alternative investment opportunities that are usually only accessible by the very wealthy, and aims to provide investors with long-term capital growth by investing in a range of alternative asset classes.

According to Skandia, traditional asset classes, such as equities, property and corporate bonds, have all lost money over the past 12 months, causing many investors to seek out alternative places to invest their money.

Jamie McLeod, chief executive of Skandia Investment Management, explains, ‘Despite recent volatility in markets, investors are looking for something new and innovative to invest in. The Skandia Alternative Investments Fund offers them the opportunity to spread risk in a fund that complements their existing investments.’

Minimum investment: £1,000 lump sum or £50 per month
Initial charge: 5%
Annual mngmt fee: 1.50%
Contact: For more details, visit www.skandiainvestmentmanagement.com

Richard Wallis says:
There is growing interest from investors in funds that offer diversified portfolios and that have a low level of correlation with traditional asset classes such as equities, corporate bonds and property. All of these have found the past 12 months a difficult environment. Skandia’s new investment fund, the Alternative Investments Fund, seeks to take advantage of this growing demand for diversification.

The fund aims to provide investors with long-term capital growth through investment in a diversified range of alternative assets. It will invest in ten different alternative investment classes. These are Timber, Currency, Water, Infrastructure, Equity Market Neutral, Commodities, Precious Metals, Volatility, Global Macro-Economic Allocation and Fund of Hedge Fund Replacement.

The initial asset allocation of the fund will be ten per cent in each specialist area, but this will be regularly rebalanced to the target weights to trim back outperforming funds and add to those investments that have fallen behind.

The fund will obtain exposure to each asset class through investment in specialist funds, some of which will not normally be accessible by the general retail investor – for example, the Timber Fund. However, the fund also invests in some well-known alternative assets funds such as the BlackRock Gold & General Fund, which provides the exposure to Precious Metals.

The new IMA Absolute Return sector will be the home of this fund, as it will be seeking to produce a positive return in all market conditions over rolling 12-month periods. Skandia believes that this new fund offers good diversification benefits owing to the number of different asset classes to be held within the portfolio, and their historically low level of correlation to the more traditional asset classes.

This fund offers a new way of obtaining exposure to a wide range of alternative asset classes, and while it is too early yet to comment on whether it represents a suitable vehicle as an alternative to cash investment, for investors who already have exposure to the traditional asset classes this may represent a useful addition to their portfolios.

However, as the fund was only recently launched, in June, it is not yet possible
to comment on whether its alternative asset investment strategy will work in practice and deliver positive annual absolute returns, although the fund is certainly worthy of monitoring for the time being.

3 Stars