BMO Diversified Monthly Income 1

Income orientated fund using derivatives to boost returns.

  • 13.00p
    Price (Inc)

    These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.

  • -
    Price (Acc)

    These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?

  • 5.00% 0.00%

    Initial charge

    Some funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!

  • 1.50%
    Annual management charge

    This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).

  • 1.82%
    Ongoing charges

    This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.

  • 5.50%
    Yield

    How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…

Prices as at 13 December 2019, fund data last updated 23 March 2009

This fund aims to provide investors with an annual yield of UK base rate plus 2%, payable monthly. The portfolio comprises 70% bonds / 30% equities, supplemented by a derivatives overlay to boost income and capital returns. Though the fund targets long term capital preservation, it has experienced some substantial drawdowns over its history.

Fund summary

Sector Specialist
Structure UNIT TRUST
Launched January, 1993
Size £57m
Yield 5.50%
Charging basis Income
Dividends paid 28th day of each month

Charges

Standard initial charge 5.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.29%
Annual management charge 1.50%
Ongoing charges figure 1.82%

Allocation

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Investment process

The fund’s objective is to provide a monthly income of 2% p.a. over the Bank of England base rates, whilst keeping fluctuations in the unit price to a minimum. The portfolio comprises around 30% blue chip equities, designed to track the FTSE 100 index, plus 70% quality bonds (minimum A rating) – these are generally equally split between government and sterling corporate bonds, plus some structured products. This core portfolio is supplemented by a derivatives overlay strategy, which F&C view as a third asset class. This is designed to make up any shortfall in income from the equities and bonds and, unlike those assets, this part of the portfolio is actively managed. Two types of traded are generally undertaken: (1) Using index or variance contracts to exploit differences between implied and future variance; (2) Positions designed to benefit from the differences between implied and realised correlations of an equity index and its constituents.

Manager research

Average monthly relative returns

  • 14/15 0.15%
  • 15/16 -0.69%
  • 16/17 -1.00%
  • 17/18 -0.48%
  • 18/19 0.00%

Bestinvest MRI

  • 3 years 0.00%
  • 5 years 0.00%
  • Career -0.40%
  • 3 years 0.00%
  • 5 years 0.00%
  • Career 7.20%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Christopher Childs

Childs is a Director of F&C Alternative Investments and is the Fund Manager of the F&C HVB-Stiftungsfonds and the High Income Fund. He joined F&C in 1993 and with the arrival of Stephen Dolbear in 1995, together with Stephen Crewe, formed the new Derivatives team (now the Alternative Investments team). He focused on fund management at the Bristol Business School and at the University of Exeter, writing a dissertation on 'Arbitrage Pricing Theory' for his Masters Degree.

Track record

Christopher Childs has 6.8 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been -0.4%. During the worst period of relative performance (from June 2007 - April 2013) there was a decline of 32% relative to the index. The worst absolute loss has been 15%.

Periods of worst performance

Absolute -15.00% (December 2007 - March 2009)
Relative -32.00% (June 2007 - April 2013)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

Allocation

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Top 10 holdings

Data accurate as at 30 April 2016

12.18% Treasury 1% Gilt 07/09/17 Gbp0.01
10.88% Treasury 1.75% Gilt 22/01/17 Gbp0.01
8.13% Treasury 5% Gilt 07/03/18 Gbp
8.04% Treasury 4% Gilt 7/09/2016
2.28% Leadenhall Ucits Ils Fund
1.99% European Investment Bank (Frn) 0.79% 22/02/2017
1.94% Hsbc Hldgs
1.93% Bp Plc
1.87% British American Tobacco Hldgs
1.75% Glaxosmithkline Plc
Source: Trustnet

Sector breakdown

Fixed Interest 48.00%
Floating Rate Notes 16.00%
Financials 12.00%
Consumer Goods 6.00%
Oil & Gas 5.00%
Consumer Services 3.00%
Health Care 3.00%
Basic Materials 2.00%
Industrials 2.00%
Net Current Assets 2.00%

Key Investor Information

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