Foundation 3, 4 and 5 aim to achieve annual returns of 3%, 4% and 5% above inflation over rolling five, seven and ten-year periods respectively.
Each manager is allocated a pool of assets in their specialist area – Buxton in fundamental equities, Cowley in credit and fixed income/macro and Simpson in ‘systematic’ alternative equities.
In deciding how to allocate to these pools, multi-asset guru Ventre and his team consider the opportunity each manager has to generate long-term outperformance, i.e. alpha.
Ventre then overlays the asset allocation with futures to ensure each fund has the appropriate asset allocation to meet is specified objective.
At launch, Foundation 3 has 45% in global equities, 40% in fixed income, with Foundation 4 taking a higher 65% allocation to shares and 20% in bonds. Both have 10% in alternatives and 5% in cash. They respectively sit within the IMA Mixed Investment 20-60% and 40-85% categories.
The more aggressive model, Foundation 5, has 85% in global equities, and 5% each in fixed income, alternatives and cash. This funds sits within the IMA Flexible sector.
Pitched as a post-RDR solution, Ventre said the funds will “enable advisers to offer a high-quality, actively managed solution to clients for whom this would potentially not otherwise be cost effective.”
