Page 7 - DIY Investor Magazine - May 2019
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      The Board are committed to provide a clean structure with excellent investor disclosure and monthly Net Asset Value ‘NAV’ reporting and the availability to trade daily via a stockbroker.
The second strategy offered by RM is called the VT RM Alternative Income ‘RMAI’. The legal structure of this is a UCITS product (an open ended structure).
The Undertakings for the Collective Investment in Transferable Securities (UCITS) is a regulatory framework which creates a harmonised regime. When you invest
in a UCITS you know as an investor there are certain protections required by the regulator:
• A UCITS may not invest more than 20% of its assets in one fund
• Concentration limits such that no investment is more than 10% in transferable securities and that the sum of investments in excess of 5% is less than 40% - the so called 5/10/40 rule
• Rules as to what kind of assets they are allowed to invest in (eligible assets) which is found in the investment policy section of the specific Fund prospectus.
• A depository which monitors cash flows and ensures cash is booked in segregated accounts
• An Authorised Corporate Director (‘ACD’) regulated by the FCA which oversees the Fund.
For example, with RMAI you have NatWest as a depository, RBC as a custodian, Valu Trac as ACD and RM Funds making the Investment Management decisions.
RMAI invests within the debt or listed equity of companies active within the infrastructure, alternative credit and specialist real estate sectors (such as GPs surgeries and Care Home businesses).
With circa 50 holdings this fund is well diversified and has a capped fund Ongoing Charges (‘OCF’) at 0.85%; investors can elect to have an Income or Accumulation share class, there is daily pricing and dealing and the
target income return is 5% from the initial income share launch price.
Comparing these regulated and unregulated structures we believe the risks that are inherent within the mini bond are an inability of the investor to be able to carry out adequate DD on the investment structure itself, the investments behind the structure and the manager.
It is also the case that these are often new companies with no track record that can be verified.
Within both RM strategies outlined earlier there is significant information available for investors to do their DD on the fund strategies and the manager.
In addition, the investment managers at RM themselves focus heavily on diligencing the underlying investments and adhere to a strict evaluation process. For example, during the DD phase for RMDL investments the RM team will typically commission legal advisors, technical advisors (such as insurance, architecture, lighting, heritage, planning and surveys), commercial advisors and property or asset valuers.
These sector experts work on behalf of RMDL, and produce detailed reports on all specialist aspects of a prospective investment.
The objectives of these reports is to provide our investment team with a detailed and insightful picture of the business, the market in which it operates and/or assets of the company.
Thus, we are aware of key technical or legal risks which could have a material impact on our investment or present an undue risk for investors.
        7 DIY Investor Magazine | May 2019

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