Absolute Insight Fund

The Absolute Insight Fund (AI), a fettered fund of funds managed by Insight Investment Management (Global) Limited (Insight), will be reallocating its assets from five to four underlying strategies, two of which are new positions. The move, expected to take place on 9 April, follows a review of the fund’s underlying strategies and is intended to strengthen the overall performance of the Fund. Performance, along with value-for-money charges, were highlighted last year in the assessment of value report produced by the fund’s ACD, BNY Mellon Fund Managers Limited (BNYMFM). 

A risk assessment by both BNY Mellon Investment Management (BNY Mellon IM) and Insight’s management team has been conducted and the allocation shift is not expected to result in any material changes in liquidity or risk. The BNYMFM directors are satisfied the repositioned portfolio will provide investors with an opportunity to achieve the performance objective while managing within its stated risk profile.

From on or about 9 April, the fund will hold 30% in each of the BNY Mellon Absolute Return Global Convertible Fund (ARC), BNY Mellon Absolute Return Equity Fund (AREF) and BNY Mellon Absolute Return Bond Fund (ARB). All three are Insight-managed and part of the BNY Mellon Global Funds plc UCITS fund range domiciled in Ireland. A further 10% will be held in the Absolute Insight Currency Fund. Insight, as part of its ongoing investment management, will review this allocation on an ongoing basis and may elect to make further changes in the future.

AREF is a long/short equity strategy, ARB is an absolute return bond strategy investing across the fixed income spectrum, while ARC invests in convertibles, which can help reduce the risks to capital on the downside, while partially sharing in the equity upside.

Exiting the portfolio are Absolute Insight Dynamic Opportunities, Absolute Insight Emerging Market Debt and Absolute Insight Credit.

Insight back tested the performance of AI as if it had been constructed based on the planned allocation to the four portfolios and found an improvement in the risk/reward dynamics compared to the current structure. They noted the data also highlighted the low correlation between the four absolute return strategies. 

As there is no change in the target benchmark of the Absolute Insight Fund – cash plus 4% – nor its performance aims, an EGM is not required for the allocation shift underway.

Expenses

In last summer’s assessment of value report, the directors of MFM found the costs for retail investors in AI to be too high. Consequently, in January fees were lowered on the three retail share classes.

Share class
Previous AMC
AMC from 1 January 2021

Class A Shares

1.50%

0.85%

Class Ap Shares

1.50%

0.85%

Class Fp Shares

1.00%

0.85%

In addition, a cap on the Absolute Insight Fund’s additional operating expenses was added at 5bps. This is to protect existing shareholders from paying more following a recent drop in the fund’s AUM.