London 25 January 2011: SCM Private, the leading active manager of Exchange Traded Funds (ETFs), is pleased to announce the robust performance of its Absolute Return Portfolio
London 25 January 2011: SCM Private, the leading active manager of Exchange Traded Funds (ETFs), is pleased to announce the robust performance of its Absolute Return Portfolio.
• +12.4%* for 12 months to end of December 2010 (compared to the average IMA Absolute Return of +4.6%)
• +27.4%* since inception 8 June 2009 to end of December 2010 (compared to the average IMA Absolute Return of +10.8%)
• Cost savings of 44.5%* against average IMA Absolute Return Fund and 87.1%* of the dealing costs saved
Alan Miller, Founding Partner and Investment Manager at SCM Private, said:
“When we launched SCM, we were determined to focus on what is in the client’s best interest rather than that of the fund management company. Our performance demonstrates that we have delivered on that promise. Central to our success has been our efficient investment approach, which uses a combination of passive investment instruments that are genuinely and continuously actively managed. This has enabled us to beat 90% of Absolute Return Funds without sacrificing our strategy of investing in an exceptionally wide and well diversified spread of liquid assets, in order to reduce the volatility of our client’s portfolios.
Whilst I wouldn’t expect those in the industry who doubted us to eat their words, I do hope that what we are achieving produces a gradual, and long-overdue, revolution in this industry.”
SCM Private has produced these returns without a high equity exposure; the average monthly net exposure to equity ETF’s was 49% in 2010. Despite this conservative asset allocation, SCM has delivered 85% of the return of investing 100% in UK equities but with only 52% of the daily volatility (as measured by standard deviation). The wide spread of different assets and the active asset allocation approach has succeeded in reducing the volatility of the portfolio.
The SCM Absolute Return Portfolio also offers significant levels of diversification with over 1,000 different underlying stocks/bonds/commodities with annual management fees from just 0.5% + vat for larger investments. The total cost saving against the average IMA Absolute Return Fund is over 44% with over 87% of dealing costs saved*.
*SCM Private performance is shown after all fees and deductions including SCM Private annual management fee of 0.75%+vat pa and performance fees of 5%+vat of the annual gain, and is based on the performance of the first client discretionary portfolio. All SCM Private Clients follow the same model portfolio. Individual client portfolios may differ principally as a result of the timing of cash flows in or out of the portfolio. SCM Private performance calculations are based on quarterly returns provided by Financial Software Ltd.
Clients of SCM Private with more than £5m invested within the SCM portfolios pay an annual management fee of 0.75%+vat pa (with no performance fees) and clients with over £10m invested pay 0.5%+vat pa (with no performance fees).
The Total Costs of Investment has been calculated as follows for SCM Private: an annual management fee of 0.75%+vat pa, performance fees of 0.45% pa based on an assumed 7.5% underlying investment return, ETF costs of 0.31% pa for the Absolute Return portfolio (based on weighted average ETF total expense ratios), and dealing costs of 0.2% pa for the Absolute Return portfolio (based on an average ETF spread of 0.21%, average turnover of 69% pa, and assumed dealing costs of 0.07% to include the commission & associated dealing related expenses).
The Total Costs of Investment has been calculated as follows for the average IMA Absolute Return Fund (using Morningstar data wherever possible): average net expense ratio of 1.71% pa, dealing costs of 1.5% pa (based on average turnover of 228% pa and assumed buy/sell costs of 67 bp) and a performance fee of 1% pa (based on the assumption of the same 7.5% pa underlying investment return and an average performance fee of 13.5% of the gain less a 0.5% cash hurdle, i.e. 13.0% of 7.5% pa).