Money Matters

What The Munro Fund offers

The Munro Fund is run in a unique way. That gives it a number of features that differentiate it from other managed fund and this section spells those out in more detail.

Low Risk

Because the fund invests in about 85% of the FTSE 350 it will capture the bulk of the movement of the market. That means it has a low risk of differing greatly from the performance of that index. Technically that gives it what is known as a low tracking error.

Improved returns

Although the fund closely follows the FTSE 350 index its holding of each stock is likely to be different from the weight that stock holds in the index. For example company ABC Ltd might have a weight of 0.43% in the index but the holding in the fund might be 0.47%. That is not a big difference, but lots of small ones, repeated over most of the stocks will, we think, allow the fund to perform better than the index over a long period. That should give the fund a positive alpha

Better risk adjusted returns

These small deviations over lots of stocks ought to give a good risk adjusted return. That can be measured by dividing the alpha over the tracking error to give the information ratio.

Better yield

The Munro Fund only invests in companies that pay a dividend or are forecast to pay one. That will help to give it a better yield than the market. In addition, because the fund tends to be overweight in companies paying out lots of dividends it should get an even better income, and a higher yield, than the market.

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