Fund Focus: Should you back F&C?
This week, Smart Money turns its attention to F&C, which has more than £10bn of savers' money under management.
F&C Investments: Over £10bn under management
Most of F&C's money is in investment trusts. These are essentially companies which invest in the shares of other companies. They can be riskier than unit trusts because they can borrow money to invest.
This week's panel of experts will suggest whether you should buy or sell and whether existing investors should hold on.
They are: Tim Cockerill of Rowan & Co; Mark Dampier of Hargreaves Lansdown; Brian Dennehy of Dennehy Weller; Darius McDermott of Chelsea Financial Services; Laurie Petar, head of global investment trusts at Jupiter and Helen Richardson of Pantheon.
Foreign & Colonial investment trust
Fund size: £2.4bn
Five year return: Up 117%
Minimum investment: £50 a month/£500 lump sum
This giant international investment trust celebrates its 140th birthday today. It was the first investment trust, so it can claim to be the first retail investment fund. Had your ancestors invested £1 when it was launched in 1868, then today you would have £5,000.
Managed by Jeremy Tigue for the past 11 years, it is the second largest conventional investment trust - it is in the FTSE 250 index - and is a popular choice with regular savers attracted by its low-cost savings scheme.
Its performance, however, is not much to write home about. Over five years, it is up less than the average global growth investment trust - 117% compared with 133% - although it's had a good past 12 months, putting on 0.43% while the typical fund in its sector has lost 4.55%. Current investments include BP and Royal Dutch Shell. In total it holds more than 600 companies' shares.
Mark Dampier, who holds the fund himself, says: 'I was highly critical of the trust a few years ago when performance around 2000 to 2005 was truly horrible.
'However, they have made some big changes and it is now performing far better - it's a good one-stop-shop investment.' Tim Cockerill adds: 'Don't expect any fireworks, just steady plodding performance. Buy if you want a conservative, diversified fund as a core holding.'
Verdict: Hold
Alternatives: Scottish Mortgage (investment trust); Rathbone Global Opportunities; Artemis Global Growth, M&G Global Basics; Neptune Global Equity
British Assets
Fund size: £545m
Five year return: Up 94.4%
Minimum investment: £50 a month/£500 lump sum
This 110-year old investment trust is showing its age. Over the past 12 months it has lost 10.6% compared with the average Global Growth & Income fund, which has lost 3.1%. And over five years, the fund, managed by Julie Dent, is up only 94.4%, while the average fund in this sector has soared by 170%.
Its aim is to beat a return based on 75% of the All Share index and 25% of the FTSE World Index. Its largest holdings include BP and Royal Dutch Shell, plus other blue chips such as Vodafone and GlaxoSmithKline. Brian Dennehy says: 'The idea of a fund with a benchmark of 75% of the FTSE All Share and 25% of FTSE World is outdated and irrelevant for most investors.'
However, Laurie Petar says the fund has steadily improved over the past three years and has just increased the dividend for the first time in three years. Both he and Mr McDermott like the income yield of 4.7%.
Verdict: Hold
Alternatives: Murray International (investment trust); Artemis Global Growth; Newton Global Higher Income
Commercial Property
Fund size: £1.3bn
One year return: Down 27.2%
Minimum investment: N/A
This investment trust, launched in March 2005, is held mainly by institutions, says F&C, which doesn't include it in its Isa or other savings schemes.
But as it's an investment trust, anyone can buy shares in it through a stockbroker - the shares are currently changing hands for 93p. This fund is 64% invested in properties, including prime West End retail premises and offices through to shopping centres in the less glamorous locations including Solihull and Colchester.
Like other property funds it has had a grim year, losing 27%, which is on a par with the average property investment trust over the same period.
However, Mr Dennehy says: 'Commercial property had a tough 2007, but the correction might well have run its course. 'On a yield of 6.4% this trust has clear attractions.' And Tim Cockerill likes the quality of the properties.
Verdict: Buy, but only for the brave.
Stewardship Growth
Fund size:: £766m
Five year return: Up 92.3%
Minimum investment: £50 a month/£1,000 lump sum
This was the first major ethical fund, launched in 1984. It has a strict selection process and rejects any companies involved in tobacco, alcohol, weapons and airlines. As such, it has had a bad time over the past 12 months, losing 20% compared with the average UK All Companies fund, which has fallen by 11.8%.
This is because the best performing sectors over this time have been oil, gas, mining and tobacco - most of the companies in these fields are not going to fit with the ethical criteria of this fund.
However, manager Ted Scott, who has managed it since launch, holds BG Group and Scottish & Southern Energy. He likes Scottish & Southern because of its 'strong position in renewable energy'. Other holdings include Capita, which administers the London congestion zone, and HBoS.
Helen Richardson of Pantheon says: 'Ted has proved that he is very talented when it comes to stock-selection even where there is a strict ethical remit to adhere to.' But Mr Dennehy says: 'Over the past three years it has had two years of sharp underperformance, and you can do better elsewhere'.
Verdict: Hold
Alternatives: Jupiter Ecology
Other F&C funds: Growth and Income: 'A good core holding with considerable potential for growth,' says Tim Cockerill. Strategic Bond: Mix of investment and non-investment bonds, yield of 5.6%.
Capital and Income: 'Sell,' says Graham Frost. 'It has underperformed the FTSE All-Share over the last three years. There are better alternatives out there.'
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