New Barclays fund offers exposure to Buffett, Rogers and more

Retail investors in Singapore can now participate in one of the most sought after stock in the world – Berkshire Hathaway shares managed by none other than the sage of equities investment himself, Warren Buffett – as part of the investment portfolio offered by the newly launched Investment Legends Fund by Barclays.

The fund will also provide exposure to global commodities through the Rogers International Commodity Index (RICI) by the guru of commodities investment, Jim Rogers.

Besides Berkshire, the fund will also invest in BlackRock, Leucadia National Corporation shares and Templeton Emerging Markets Fund, which are helmed by other renowned value investment advocates such as Laurence Fink, Ian Cumming, Joseph Steinberg and Templeton's Mark Mobius.

The stocks of these companies have posted robust returns over the past five years: Berkshire has delivered an annualised return of 12.3%, BlackRock 36.8%, Leucadia 32.4% and Templeton Emerging Markets 25.1%.

Both the equities and commodities segments will each make up 40% of the initial weighting of the Legends' investment fund portfolio, with the remaining 20% allotted to fixed income assets that feeds into the Pacific Investment Management Company's (PIMCO) Total Return Bond Fund, managed by noted bond fund manager Bill Gross.

Barclays Capital Director of Investment in Singapore, Tan Yong Sheng said, "The Legends fund enable retail investors to ride on the performance and investment insights of some of the world's most renowned investment gurus. It is an innovative, one-stop packaged investment solution providing easy access to a diversified portfolio of stocks, funds and indices."

"We are basically looking at the value investment approach in the selection of asset classes," said Tan, who noted that such a focus led by the respective investment managers have seen all the asset classes outperforming the benchmark S&P index since the onset of the US sub-prime crisis.

He pointed out that all of them had stayed in positive territory during the period between July 2007 and May 2008 while the S&P dipped 8.7%. In fact, with the exception of the Templeton fund, which eked out a 1.2% gain, the others all saw double-digits gains ranging from 11.8% for the PIMCO bond portfolio to a 50.4% rise in return from the RICI index (See table 2 below). Berkshire shares had posted a return of 18.3% during the same period compared to the Dow Jones Global Titans Index, which gave up 4.1%.

The Legends fund also offers low entry cost for exposure to Berkshire Hathaway shares. "Berkshire B shares alone cost US$420,000 for 100 shares, which is beyond the reach of most investors," said Tan.


Table 2: Past Performance of portfolio components*

The value investment – as opposed to market timing – approach as well as the inclusion of commodities assets makes the Legends portfolio a good hedge against rising cost in living and is well-suited to the objective of a retirement fund, he said.

Echoing Jim Rogers' oft-quoted view that commodities markets is still in the midst of a multi-year bull run, Tan pointed out that bonds and value stocks tend to hold up better during bearish market conditions while emerging market equities have the knack of market outperformance during bull markets.

The low correlation between the three assets classes in the Legends portfolio also means a well diversification in investment risks, he added.

Investors can choose to subscribe to shares of the open-ended Legends fund in either Singapore or US dollars with a minimum investment of $1,000 dollars in either currency, with subsequent top-up in multiples of $100. There is an annual management fee of 1.5% plus a fixed admin fee of no more than 0.2% yearly. Sing-dollar units will be hedged to offset the potential impact of a strengthening US dollar.

Tan disclosed that the Legends fund had garnered some US$300 million when it was launched in Hong Kong in May under a US dollar share class. The net asset value of the fund is now 'slightly above par' in Hong Kong, he said.

The initial offer for the fund, which is distributed by DBS, POSB and Standard Chartered Bank will end on 18 July. Trading starts on 28 July.


By A J Leow, June 2008

For more information, please refer to:
http://www.sias.org.sg/sites/sias.org.sg/CMS/File/singaporeInvestor/Sales Pitch 18Jun08 Generic.pdf

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