By Jenne Mannion Virgin's Richard Branson, champion of the tracker fund, has lost a bet made with...
By Jenne Mannion
Virgin's Richard Branson, champion of the tracker fund, has lost a bet made with Nicola Horlick three years ago that her fund group SG Asset Management's UK Growth fund could not outperform the All-Share by 2% each year over three years.
Branson's Virgin Direct is a major provider of index tracker funds. He challenged Horlick that the then-new UK Growth fund, launched on 18 March 1998 and managed by Peter Seabrook, would not be able to fulfil its objective of achieving 2% outperformance of the index.
Three years later, to 16 March 2001, the SG UK Growth fund was up 11.8%, offer to bid (including charges), compared with the All-Share, which is up 4.7% over the same period.
Meanwhile, the Virgin UK Index Tracking fund returned just 1.88% over the period, notably behind the index (due to charges). The SG fund is ranked 39 of 71 fund in the UK All Companies unit trust sector, which includes tracker funds and on average delivered 3.3%, over the three-year period.
Mikkel Bates, director at SG Asset Management, said Seabrook's UK Growth fund achieved exactly what it had set out to do.
"The fund doesn't aim to shoot the lights out. Rather it aims to consistently outperform the All-Share by 2% after charges and it has done exactly that," Bates said.
Gordon Maw, spokesman at Virgin Direct said SG Asset Management won fair and square in outperforming the index. "They've done incredibly well over this period." he said.
As agreed Branson will donate £6,000 to a charity of Horlick's choice, which will be the Great Ormond Street Children's Hospital.