About Fundamental Tracker Investment Management

Frequently Asked Questions

Can I put The Munro Fund in my ISA

Yes.

Can I receive an income from The Munro Fund?

Yes if you invest in the Distribution Class

How many shares does The Munro Fund hold?

It depends to some extent on how many companies in the FTSE 350 are paying dividends. Most of them do but allowing for those that don’t and removing Investment Trusts brings the number down to about 300.

What benchmark does The Munro Fund use?

The FTSE 350

Why does The Munro Fund use forecast dividends as the basis for its portfolio construction?

A company’s dividend payment is the only number in a company’s accounts that is not an opinion.

Do the managers interview company executives?

No they don’t. To interview all 300 companies twice a year after each set of results would be too time consuming. Besides, company directors are very restricted now in what they can say that is not already in the public domain. We don’t think it is the best use of our time.

How much do we charge?

It depends on the class of units you invest in. The charges range from an annual fee of 0.75% to 1.5%. In addition there may be an initial charge if you use a financial advisor. All the details on charges are detailed in the section on How to Invest.

Are charges taken from capital or income?

Charges are allocated to capital.

What is the yield on the fund?

Dividends are only paid on the distribution units. The yield will vary with the market and the amount companies pay out in dividends and, to a lesser extent, on exchange rates. Overall, the yield on the fund can be expected to be slightly higher than the market because the fund does not invest in companies that don’t pay a dividend.

How risky is The Munro Fund?

Like all equity investments your capital is at risk. However, The Munro Fund is less risky than most because it holds so many shares, about 300. That means the risk to the portfolio from any individual company is reduced. There is still the overall market risk, but you need to take some risk to get a return that is better than the risk free rate available from bonds or cash deposits. All the evidence shows that investing in equities for periods of ten years or more give better returns than other asset classes do.

What is the difference between The Munro Fund and a tracker fund?

A tracker fund holds shares in the index in proportion to their market capitalisation. In other words the share price multiplied by the number of shares. That does not have a direct correlation with the underlying fundamental financial attributes of the company. In some cases the market may ascribe a very high valuation to a company, such as happened with technology shares in the dot com boom, or it may put a very low valuation on a company if that sector is unfashionable. The Munro Fund does not use share prices to calculate how much of a company to hold. It only uses the amount of cash a company is forecast to pay out to shareholders.

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