Barclays Wealth trend funds celebrate positive first year returns
Barclays Wealth is celebrating the successful first anniversary of the Trend funds - the IFSL Barclays FTSE 100 Trend Fund and the IFSL Barclays FTSE Protector 80 Trend Fund have both delivered positive returns in turbulent economic times. Using a dynamic rules-based investment approach which aims to benefit investors in both upwards and downwards market trends, the Funds have succeeding in generating growth for investors. The Funds represent an effective solution for those investors seeking a low-volatility UK equity investment with an absolute return overlay.
As volatility hit the markets in August, the IFSL Barclays FTSE 100 Trend Fund initially moved to cash and subsequently took a short position with an allocation of 10%. In aggregate, this meant that during August the average volatility of the fund price was 10.1% compared to 28.7% for the underlying FTSE Total Return Index. During the month of August, the fund fell by just 4.8% at its lowest point (compared to the start of the month). The equivalent figure for the index was a larger 12.0%.
Both Funds are linked to the Barclays FTSE 100 Trend Total Return Index which adopts a straightforward, rules-based approach with three key steps. The first step aims to identify if the market is in a positive trend (market trending upwards), negative trend (market trending downwards) or if no trend is discernable. Once a trend is identified the second stage is employed whereby the Fund examines market volatility and defines the level of exposure to the underlying index within a range of 0-100%. In a positive trend the Fund will take a long position in the Index (the FTSE 100 Total Return Index) and in a negative trend the Fund will take a short position. If no trend is identified or markets are too volatile the Fund allocates to cash.
The final stage is specific to the individual Funds. The IFSL Barclays FTSE 100 Trend Fund employs a smart stop feature which aims to insulate investors from significant market falls. A defensive allocation to cash is triggered should the Index experience a fall of 2.5% or more over a five business day rolling period. This pre-set allocation rule aims to reduce downside risk in extreme market scenarios.
The IFSL Barclays FTSE Protector 80 Trend Fund is likely to appeal to more conservative investors. This Fund employs a technique whereby it allocates between the strategy and cash depending on market conditions. Therefore if market conditions are favourable, the Fund will tend to increase exposure to the strategy and less to cash - and visa versa. Ultimately the Fund is run with the objective of protecting 80% of the highest ever NAV price.
Richard Henry, Director, Investor Solutions, Barclays Wealth comments: "It's certainly been an extremely challenging environment to generate returns but the strategy of the funds has enabled them to take market conditions in their stride. The Trend Funds are ideal for investors seeking core UK Equity exposure, with the potential to deliver stable, positive returns whether the market direction is upwards or downwards - this makes for an attractive proposition as markets continue to exhibit uncertainty."
Bryan Parkinson, Director of UK IFA Distribution, Barclays Wealth comments: "We launched these funds a year ago to highlight our ongoing commitment to expanding our funds range into the intermediary market, and it is encouraging they are delivering returns for intermediaries and their clients. We are continuing to see a growing demand for these types of products, especially considering the increasing challenges facing investors at the present time, and look forward to continuing to offer a broader range of products to our clients in the future."
The Funds are currently available on a variety of platforms, including Cofunds, Ascentric, Transact and Nucleus. The Funds are structured as an OEIC and are UK domiciled.
Full details of all products can be found at barclaysinvestmentsolutions.com.