Whether it has been soft-closed or is more institutionally focused, it is inaccessible to the everyday investor who has between £1,000 and £10,000 at their disposal. Or is it?
While many prefer to invest directly and bypass the fees that come with using a platform such as Hargreaves Lansdown, it is possible to get exposure to a number of top-rated funds without having to cough up hundreds of thousands of pounds.
"If the manager has closed the fund because they have big concerns about size, then of course we wouldn’t want to jeopardise that, but if they’re happy to keep inflows coming in steadily then we’d look to getting access for our clients," explained Hargreaves Lansdown's Richard Troue.
"Sometimes the minimum investment is whacked up because the manager doesn’t want to deal with loads of clients, or doesn’t want a fund of funds to take a biggish position. In these cases, it’s possible for us to waive the initial fee and make it more realistic for retail investors."
Here is a selection of "inaccessible" funds on the Hargreaves Lansdown platform with reasonable minimum investments:
Standard Life UK Smaller Companies
Harry Nimmo’s £998m portfolio is one of the most consistent performers in the IMA UK Smaller Companies sector, which has led to mass inflows from retail investors. As a result, Standard Life decided to soft-close it back in August last year, much to the disappointment of investors and IFAs.
However, the fund is still available to clients of Hargreaves Lansdown. Investors can get access for a minimum investment of £1,000 and a minimum top-up of £80.
It has a total expense ratio (TER) of 1.69 per cent.
Performance of fund vs sector and index over 10-yrs
Source: FE Analytics
According to FE data, Standard Life UK Smaller Companies has returned just shy of 300 per cent over the last decade, compared with 164.28 per cent from its IMA UK Smaller Companies sector average and benchmark. The fund is a top-quartile performer over three, five and 10 years.
Newton Real Return
With a minimum investment of £20,000, FE Alpha Manager Iain Stewart's highly rated Newton Real Return fund is out of reach of the run-of-the-mill retail investor.
However, Hargreaves waives this charge and investors only need to cough up £1,000 initially and then at least £50 in the form of top-ups.
Stewart, who has headed up the portfolio since March 2004, is one of the few managers who has managed to live up to the "absolute return" tag in recent years; according to our data, he has managed a positive return in every year with the exception of 2011, when he lost 0.35 per cent.
Newton Real Return has delivered 111.79 per cent since Stewart’s arrival, compared with 30.30 per cent from its Libor GBP 1-Month benchmark.
It is also one of the few Absolute Return funds that is yielding anything of note [2.86 per cent].
The manager currently has 22 per cent in cash, which he is sitting on until he finds more opportunities in the market. His equity weighting is currently 48.3 per cent, while bonds make up 24.7 per cent of the portfolio.
Most of Stewart’s fixed interest exposure is in B and BB rated bonds.
Trojan
FE Alpha Manager Sebastian Lyon looked to soft-close this £2bn fund and raise the minimum investment to £250,000, not because of concerns over size, but because the management didn’t want all its time taken up by meetings with shareholders.
In spite of the soft-closure, it is still the 10th best-selling fund of the last year, with inflows of £722m.
This is in part due to existing investors adding to their positions, but also from clients of Hargreaves Lansdown, who can still buy the fund with a minimum investment of £1,000 and a minimum top-up of £50.
Trojan is arguably one of the best-performing multi-asset funds of the last decade, topping its IMA Flexible sector over three and five years, with significantly less volatility than its peer group and FTSE All Share benchmark.
With returns of more than 160 per cent, it is a top-quartile performer over a 10-year period as well.
Performance of fund vs sector and index over 10-yrs
Source: FE Analytics
The fund holds a mixture of equities, bonds and alternative assets, including gold and gold equities. It is currently defensively positioned, with just 31 per cent in equities.
It has a TER of 1.03 per cent, making it among the cheapest funds of its kind.
Vanguard FTSE UK Equity Index
The group is rated as one of the best in the passive market, but hefty minimum investments of £100,000 mean that most investors have to look elsewhere.
The £484m Vanguard FTSE UK Equity Index fund is among the most popular. Manager E David Kirby attempts to replicate the FTSE All Share net of fees, which it has very nearly managed since its launch in June 2009. According to FE data, it has returned 53.36 per cent over this period – just 0.59 per cent short of the index.
It has a TER of just 0.15 per cent, making it one of the cheapest trackers in the UK market.
Retail investors can gain access by going through Hargreaves Lansdown, where they will need a minimum investment of just £1,000 and a minimum top-up of £50.