Fund and trust news: trust launch planned for Buffettology

The latest fund developments include plans for a new investment trust and figures that show sustainable funds are in high demand.

High demand for ethical and sustainable funds

Investor demand for funds that invest ethically or sustainably is continuing to gather momentum, according to The Pridham Report. 

The report, which has for more than 20 years monitored fund sales and asset trends among UK investors, shows that ethical and sustainable funds were in high demand in the second quarter of 2020.

The report notes strong ethical fund sales for Royal London, Baillie Gifford and Liontrust helped ensure all three fund groups were among the top 10 fund firms for both gross and net fund sales in the second quarter.

Royal London saw 80% of investor money enter its sustainable products, such as Royal London Sustainable Leaders. In the case of Liontrust, the group’s Sustainable Future Funds accounted for half its net fund sales.

For Baillie Gifford, its best-selling fund was Baillie Gifford American, but it also attracted investors looking for sustainable options, with Baillie Gifford Positive Change another of its top sellers during the quarter.

Plans for investment trust for Buffettology

Next, it is still at a very early stage, but plans are being drawn up for the launch of the Buffettology Smaller Companies Investment Trust. There are no other details yet, but fans of CFP SDL UK Buffettology, an ii Super 60 fund will be watching with interest when information becomes available.

Keith Ashworth-Lord, who has run CFP SDL UK Buffettologysince its inception in 2011, follows a style known as  “business perspective investing”, which is Warren  Buffett’s principle of buying shares in good businesses for less than the businesses are intrinsically worth, and ideally holding the shares for ever.

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Property funds changes proposed

Earlier this week, the Financial Conduct Authority (FCA) announced that it is consulting on proposals to reduce the potential for harm to investors from the liquidity mismatch in open-ended property funds. 

The new rules, as proposed, would require investors to give notice – potentially of up to 180 days – before their investment is redeemed.

Dzmitry Lipski, head of funds research at interactive investor, says: “While these proposals address the liquidity mismatch in open-ended funds, they come with strings attached. After so many property fund suspensions over the past four years, many property fund investors have seen their assets go into deep freeze.

“The proposals, with a notice period of up to 180 days, mean that investors will still effectively have to keep their assets on ice for up to six months.”

Investors flock to retail funds

Retail investors poured £11.2 billion into funds in the second quarter in attempt to pick up bargains following the heavy stock market falls in the first quarter of 2020.

But, while retail investors appear bullish, various professional investors caution that markets may have moved too fast, too soon.