Investec - Global Strategic Income and Global Multi Asset Income funds merge
On 17 June 2016 Investec will merge their Global Strategic Income Fund with their Multi-Asset Income fund to have a better opportunity of achieving a high level of income.
Investec Asset Management has advised that it will be merging its Investec Global Strategic Income Fund (the ‘merging fund’) into its Investec Global Multi-Asset Income Fund (the ‘receiving’ fund) on 17 June 2016.
Why is Investec merging the fund?
The Global Strategic Income Fund’s primary objective is to generate a high level of income by investing primarily in fixed income investments from around the world. With global interest rates at record lows, and in some cases negative, fixed income investment are providing a lower level of income than they have done historically.
Therefore Investec feels that in order to seek to achieve a high and sustainable level of income it is better to invest in a broader range of investments than simply fixed income investments.
The Global Multi-Asset Income Fund is investing in a broad range of investments, including equities and derivatives, in addition to fixed income instruments. The Investment Manager at Investec feels that this wide investment universe gives it a better opportunity of achieving its income objective whilst offering potential for capital growth with relatively low volatility.
As a result the Directors from Investec feel the Global Multi-Asset Income Fund is a better solution for Shareholders seeking a high and sustainable level of income with relatively low volatility in current market circumstances and therefore a merger with the Receiving Fund is in the best interests of Shareholders.
Annual Management Fee
The receiving fund can invest across a wider range of investment types, including equities, and so requires more investment management resource than the merging fund. As a result the receiving fund has an annual management fee of 0.25% higher than the merging fund.
How the merger affects your clients’ policies
The receiving fund has now been added to the Oracle, Paragon and Quantum fund range as a new fund option.
The merging fund has been removed from the Oracle, Paragon and Quantum fund range with immediate effect, and we will no longer accept any new, non contractual, investments into the fund. For existing investors we will allow contractual regular premiums (where applicable) to continue being invested into the fund until 3 June 2016 at which point we will then switch their holdings from the merging fund into the receiving fund. We do this in advance in order to meet dealing cut-offs and avoid submitting large redemption requests near, or on, the day of the merger. We will also redirect any regular premiums into this fund, where applicable.
Alternative fund choice
If you are not happy with your clients’ holdings being transferred into the Global Multi-Asset Income Fund then you can choose to switch into any other fund available to their policy.
You can provide alternative instructions either by submitting a completed Fund switch instruction form, or if registered a registered user of our Online Service Centre and fund switching facility, conducting a switch and premium redirection online.
We have issued letters to Oracle, Paragon and Quantum policyholders affected by the merger. Where an investment adviser is appointed, they will receive our notification instead of the policyholder. Servicing financial advisers attached to these policies will receive a copy of the letter for their information.
Sample letters can be viewed opposite.