Launched this week, UK Value, US Value and European (ex UK) Value funds – benchmarked against major MSCI indices – aim to offset periods of underperformance in value investing.
Stocks are selected on basis of neutralising sector, small cap and momentum biases; the European fund is also neutral on a country basis.
These three funds carry an ongoing charges figure (OCF) of 0.35%, while a third vehicle, EM Value Fund, will launch later this summer with an OCF of 0.4%.
Billed as ‘smart passive’ – 7IM does not believe the terms ‘alpha’ and ‘beta’ mean much to clients outside of financial services – the equity value baskets are run under the guidance of chief investment officer Chris Darbyshire, resourced by Alessandro Laurent and Christopher Cowell.
“The 7IM smart passive strategies have existed for some time in the 7IM funds, and are baskets of individual stocks selected as having primarily value characteristics,” said Laurent, senior portfolio manager.
“Risk Factors are however not independent of each other, and not every risk factor rewards investors in the same way. In selecting stocks for any given factor an investor might be exposed to other, potentially undesired, sources of risk.
“In order to successfully implement a systematic factor investment, we believe it is key not only to identify the different risk factors, but also to isolate them to avoid exposure to such undesired risks. This allows us both to be exposed to the desired stock characteristics and also to have a better control of the overall portfolio risk”.
There are two share classes for the funds – Z (0% AMC) and C (0.25% AMC) for 7IM models and its platform.
UK Equity Value Fund will fit into the IA UK All Companies sector; European (Ex UK) Value Fund in the IA Europe Ex UK category; US Equity Value Fund in IA North America; and Emerging Markets Equity Value Fund in IA Global Emerging Markets.
