Due to begin trading on 1 October subject to regulatory approval, the Rathbone Strategic Income Portfolio will seek medium-risk opportunities across the global asset class spectrum, utilising the same allocation and risk-rating as Rathbones’ Strategic Growth Portfolio.
While the fund will employ a diverse investment mandate, its emphasis will be on large-cap direct equities and bonds.
Pursuing monthly gross yield of 4% – with minimum nominal yield of 3% and targeted total return between CPI +3% and 5% on a five to seven-year view – the fund will carry an ongoing charges figure of 0.84% and risk budget aiming for two-thirds of the MSCI World Index.
Once regulatory clearance has been received, there will be a fixed-price launch period from 16 September, closing upon the fund becoming active two weeks later.
In order to align it with the rest of Rathbones’ multi-asset range, the firm’s Enhanced Growth Portfolio’s targeted return benchmark will be altered to exceed CPI +5% from 1 October, up from 2%, though it will retain its existing volatility directive.
As part of the alterations to its multi-asset suite, Rathbones is transferring its Strategic Growth, Total Return and Enhanced Growth portfolios from their existing I-class shares to S-class shares, the former of which will be retired.
The change, effective from 1 August, will see the portfolios’ annual management charge for existing I-class shareholders drop from 0.75% to 0.5%, while the ongoing charges figure will drop by around 0.11%.
David Coombs, Rathbones’ head of multi-asset, cited an imminent period of increased volatility as markets negotiate the culmination of six years’ worth of central bank policies combating the financial crisis fall-out as a key factor behind the significant portfolio amendments.
“We have designed a portfolio that should deliver a realistic and sustainable income stream within acceptable risk parameters, rather than chasing higher-yielding opportunities that carry a worryingly disproportionate element of risk,” said Coombs.
“We believe peak rates will be much lower than historical comparisons, meaning we must be nimble when allocating to different asset classes. Liquidity will be a key factor and form a cornerstone of our thinking, hence investments in government bonds, large-cap equities and short-dated investment grade bonds. We will also have exposure to specialist funds in more illiquid areas which have low duration exposure, typically in closed-ended vehicles.”
“Crucially, we believe there is a structural shift away from pure multi-manager funds towards multi-asset portfolios that offer a more nuanced, private client-style product,” added Mike Webb, CEO of RUIT.
“This is reflected in the move to include direct large-cap equities in these portfolios – something that has always been permitted, but it is now an explicit consideration in security selection. We believe this will give the manager a greater control of risk and prove more cost-efficient for investors.”
