7IM has launched the final and most high-risk of its Pathbuilder range with the introduction of the Pathbuilder 4 portfolio.
Launched on Monday the fund charges 0.22% like the rest of the funds in the range, but aims to deliver customers a higher average annual return. Since their launch a year ago, the three prior Pathbuilder funds (1, 2 and 3) have gone up by 3.7%, 7.3% and 9.7% respectively.
The Pathbuilder 4 portfolio is predominantly invested in stock market trackers, with 92.4% of the fund invested in equities.
The largest sector weighting is to UK equities, which make up 27.8% of the portfolio, while funds that track the US stockmarket make up 25.7% of the fund. Both of the US index trackers chosen invest using environmental, social and governance (ESG).
Asia and emerging market funds make up 15%, while the remaining equity portion is split between Europe and Japan. Around 5.7% has been invested in real estate, while it also has 1.9% in cash.
Like the others in the range, Pathbuilder 4 will only be available to advisers and has been designed as a complement to its pre-existing model portfolio service (MPS) range of six portfolios that ranges from ‘cautious’ to ‘adventurous’.
7IM has launched the fund during a time when market sentiment seems to be going against passive funds. In October this year, passive funds were hit with an outflow of £709m, the worst net loss on record.
Many investors seemed to put their faith into actively managed funds who would better navigate the increasingly unstable markets following the uncertainty of Covid and sharp rises in inflation.
However, Mark Fitzgerald, European head of product specialism at Vanguard said, “over the past decade investors have increasingly voted with their feet, moving from high-cost investment products to low-cost ones.
“Index investing, which is fundamentally a means of holding balanced, diversified portfolios at a very low cost, has been one of the beneficiaries of that broader trend. Consequently, index investing has largely become part of the norm for many investors, professional and retail alike.”