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Product category: Savings and investment
News Release from: Insight Investment | Subject: Savings
Edited by the Insidemoneytalk Editorial Team on 18 May 2007

Insight Investment diversified target
return fund:

News Update

The team behind the Insight Investment Diversified Target Return Fund (DTR) says the recipe for the fund's continuing low volatility in the face of recent stock market instability is owed to the increased powers for the use of derivatives that it gained when it converted to a UCITS III structure just over six months ago UCITS III is key to beating marketing volatility, says Armstrong: The fund's UCITS III structure allows its managers the flexibility to invest in shares in funds which in turn are invested in equities, fixed interest, cash, commodities, property, structured products and derivatives in order to reduce volatility through investment market cycles

Patrick Armstrong, co-manager of the Diversified Target Return Fund, says: "There have been two significant sell-offs in equities since we converted to UCITS III: the first in November 2006, and most recently at the end of February this year".

"We believe DTR's ever-increasing diversification, combined with the new investment powers since the conversion, has allowed DTR to weather these storms, with only 2.7% volatility, vs".

"10.7% volatility in the FTSE 100 since its conversion to UCITS III.*" Opportunities in Asia continue as DTR team adds more Macau: The DTR team continues to see opportunities in Asia; and DTR remains skewed towards the region where it sees better value in terms of currencies, equities, private equity and property.

The team recently increased its holding in Speymill Capital Macau Property, a fundwhich invests primarily in the high quality residential property market of Macau.

Dr Ana Cukic-Munro co-manager of the Diversified Target Return Fund said: "As the only legalised gaming city in China, Macau is becoming the number one destination of its kind in the Far East".

"A massive influx of Western casino developments has begun and gaming revenues outstripped Las Vegas in 2006." She continued, "Shares in Speymill Capital Macau Property have increased in value by more than 60% since we first bought into it in November 2006".

"Hong Kong and Macau both have a GDP per capita of just under USD30,000 per annum, but residential property in Macau is a fraction of the price of Hong Kong".

"We expect a convergence in prices in coming years, as a bridge connects these two cities, and as Macau benefits from an influx of visitors, and residents".

"This stock gives us access to inexpensive property in Macau, managed by a great property team." Thematic equities: water and the environment: Water and the environment will continue to be a central portfolio theme in DTR.

The team expects significant growth in this area as concerns about the environmental impact of traditional sources of energy increase and the accelerated urbanisation of the developing world grows apace.

6.1% of the DTR fund is currently invested in funds which invest in stocks linked to water and the environment.

Two new holdings in this area are: iShares SandP Global Water ETF, an exchange traded fund managed by Barclays Global Investors and listed on the London Stock Exchange.

The fund aims to give a broad based exposure to shares of 50 of the world's largest water companies, including water utilities and water equipment stocks.

Impax Environmental Markets Fund, which has a bias towards smaller caps and younger companies across three defined themes of alternative energy and energy efficiency; water technologies and pollution control; and waste technology and resources management.

Armstrong comments on the team's rationale for including water and the environment as a thematic focus in DTR: "Water and the environment continue to be a core theme for DTR during 2007".

"We believe that companies involved in environment technologies and services such as renewable energy, waste management and water recycling will benefit as state and industry leaders begin to actively address environmental issues." He continues: "The UN estimates that one third of the world's population lives in areas where fresh water is scarce".

"We also expect that companies involved in improving water quality and conservation will also benefit from increased demand for fresh water." The ?100.9m** DTR fund was launched on 18 February 2005 and is part of Insight's multi-manager fund range, managed by Dr Ana Cukic-Munro and Patrick Armstrong.

It has the objective of delivering positive returns on an annual basis with the prospect of long-term growth commensurate with investment in equities, and volatility in line with bonds.

DTR has achieved an absolute return of 19.8% since launch*** with a volatility of just 3.4% - lower than the FTSE Government All Stock index volatility of 3.9%.

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