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Plain English Finance (PEF) Global Multi-Asset Fund set to launch


Andrew Craig, author of the personal finance book, “How to Own The World”, is launching a new fund that is aimed at making life simpler for many financial advisers.

The “VT PEF Global Multi-Asset Fund” is launching later this year and will be available from most leading UK stockbrokers and investment platforms. It will use a simple trend following methodology on each of these investment ‘silos’ developed in conjunction with Professors Andrew Clare and Steven Thomas from Cass Business School.  In order to minimise dealing costs, the fund only trades in one of two scenarios: 1) Once a month on one specific (and fixed) trading day. 2) If the value of assets in the fund increases or decreases by 5 per cent or more.
The fund will invest in a wide mix of 24 assets (to own the world), including; EU, UK, Asia, American and emerging market shares, a mixture of bond assets, gold, agriculture and energy commodities, real estate and infrastructure.
Craig, Founder of Plain English Finance and Investment Manager, believes advisers can use the fund successfully in one of two ways; “Advisers have two common headaches when dealing with asset allocation. There is the headache of achieving diversification at a low cost – it is true that ETFs have assisted with this but for advisers managing asset allocation for clients managing that diversification can come at the expense of analysis and management of higher growth strategies. This is a particular problem for anyone trying to run a core satellite approach. The VT PEF Global Multi-Asset Fund offers this diversification for a relatively low cost, freeing up advisers’ time to manage and analyse strong but more volatile growth opportunities for their clients.”
“The second headache is how to protect clients when markets fall. At the moment, we are seeing an increasing number of voices declare the end of the credit and equity bull run. Whether that proves to be a correction or a more sustained bear market and when that happens we will only know in hindsight.  However, advisers need to be able to make it clear to clients that they are protecting their portfolios and when falls occur that protection should be evident and simple to express. Many advisers are disappointed by the performance of some DFM strategies, but the VT PEF Global Multi-Asset is also designed to protect against market falls, taking that headache away.”
The PEF fund utilises diversification, compound interest and formula based trend following to minimise the impact that market falls have on portfolios; seeking to grow slowly and steadily over time.  Back-tested performance numbers from January 2001 to the end of July 2017 show that the strategy would have delivered a 7.22 per cent annualised return after costs, with low volatility and risk of loss. The worst ‘down’ year was -6.6 per cent in 2008 relative to 1972 many markets which were down more than 40 per cent.  An investment of GBP100,000 in January 2001 with no further investment could now be worth GBP320,000.
Craig says: “We concede that people are often suspicious of back-tested or simulated performance numbers.  However, our strategy arguably lends itself to back testing more than many because it uses a fixed allocation to large, liquid assets – showing what would have happened in the real world, using strict, rules-based processes to invest in entire markets (eg the S&P 500, FTSE 100, gold and so forth).
“The added benefit of this approach is that it is easy to explain to clients who are risk averse and want to see their portfolios grow at a multiple of interest rates over time with minimal loss.  The product is ideal for investors at every end of the wealth spectrum.”
The Fund will have a minimum investment of GBP100, an annual management charge of 0.9 per cent and an OCF of 1.14 per cent.

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