From 6 November the fund will be named 7IM Real Return, while at the same time the annual management charge is being changed, with the removal of a mechanism that acted to reduce the AMC during times of underperformance.
Previously the 1% AMC would be cut to 0.75% in the event of the fund being priced lower than it was 12 months before. From next month this will be removed and the AMC will be set at a permanently reduced rate of 0.6%. As a result, the ongoing charge fee will fall from 1.26% to 0.79%.
Launched in January 2012 with the objective of providing a total return that exceeded UK inflation (as measured by the CPI index) by 2% over a rolling three-year period, 7IM said feedback from investors and advisers was that the existing fund name did not fully reflect its nature.
While the fund’s objective will be unchanged after the name change, 7IM is introducing a risk guideline, that ‘there will be a moderate risk to capital’. This follows feedback that there is investor demand for prominent risk guidelines, in addition to the synthetic risk and reward indicators that have always been displayed in the KIIDs.
“We have seen increasing demand among our investor base, especially those running their own portfolios, for the inclusion of a fund with a real return objective, but without heavy exposure to equity market risk,” said Robert Poulten, head of sales at 7IM.
“However, investors also want the strategies within ‘real return’ type funds to be understandable, liquid, and perform as expected, given that more recently there has been a wide variation in the performance of funds within the Targeted Absolute Return sector.”
