frequently asked questions
For whom is this fund?
This fund is for investors who have a moderate risk profile and want to grow their investments in real terms (i.e. above inflation) over the long term.
It is for investors who want global equity exposure balanced with lower risk fixed income securities.
It is for investors who want to outsource the decisions on bond versus equity allocation, which regions, countries and sectors to own, and what duration and credit risk to take.
It is for investors who want a robust, model-based rebalancing process applied to their savings without having to worry about doing so themselves.
Is your fund available for Charities, Companies or Family Offices?
Most certainly. You can either invest in the Fund via your existing platform, the bank you use for investments, or directly via subscription forms sent to the Fund administrator (documents for this are on this website).
Can I buy the Omba fund in my SIPP or ISA in the UK?
Yes, you can ask your platform to do so if it is already available. If not, you need to send them the ISIN, fund name and link to this website saying you wish to invest into the fund. They will then add the fund. If you have issues doing so, please contact us. The fund is already available on some platforms in the UK and via a number of banks which have invested on behalf of their clients.
How do I invest in the Fund?
You can invest in the fund via your bank account or platform provided you can hold a fund denominated in GBP, USD or EUR in that account (no minimum investment amount). Alternatively, you can invest directly into the fund by subscribing for units directly (minimum initial investment amount is £/$/€ 100,000) by completing this application form.
What are the Omba team credentials?
Our team all hail from experience in large corporations including: Goldman Sachs, Barclays, EY, KPMG, Glencore, Rand Merchant Bank, Investec Bank, Ethos Private Equity and the European Bank for Reconstruction and Development.
How can I invest with Omba?
This is done by 1) either asking your existing IFA, or if you’re self-directed by subscribing on your existing platform of bank, to invest in the fund on your behalf. Your existing platform or bank will complete the necessary forms and back office processes to invest; or 2) investing directly into the fund by completing the application form available on this website.
If you have $5 million, € 4 million or £ 3 million to invest please contact us as there are other ways in which you can invest in an Omba managed solution.
How does a fund work?
A fund is an investment vehicle which allows many investors to buy units in (or a share of) a portfolio of assets. An open-ended fund like the Omba Moderate Risk Global Allocation Fund allows new investors to join the investment vehicle by depositing cash into the fund and then sharing in the underlying performance of these assets. When new investors buy units in the fund new units are issued and when investors sell their units in the fund (redeem) their units are cancelled, and the proceeds raised by the fund are transferred back to the investor.
What is the investment strategy of the fund?
The fund aims to beat US CPI +3% over the long term thus growing investors’ money in real terms. We try achieving this by investing into a mix of growth assets (typically equities) and yielding assets (typically bonds) which both provide returns above cash and inflation over the long term.
At the core of our process is tactically investing in countries and sectors when they become cheap(er). i.e. we have a valuation bias to our approach. We want to avoid short term fads, bubbles and hype and rather invest into sectors and countries which have underperformed and become out of favour with investors (oversold). We tactically tilt into these countries and sectors during the course of an investment cycle and we also take views on how much equity or bonds one should own during different stages of the investment cycle, transferring the emotional challenges and biases of doing so from you to us. By being in a fund these shifts can also be more tax efficient for investors as gains don’t need to be realised (and taxed) in the hands of investors.
What is your edge in your investment process?
We derive our edge from our robust, model-based investment framework as well as simply sticking to the following common-sense rules:
- Portfolios need to own growth assets, like equities, to beat inflation in the long-term – so we always include an equity allocation in our portfolios.
- Asset allocation drives most of investors’ returns so we first aim to get the asset allocation right before trying to tweak the sector or country exposures.
- Diversification is critical to avoiding permanent capital loss.
- We believe a home bias does not serve investors well in the long term. The world presents so many other interesting opportunities – thus our portfolios are global.
- We don’t believe currency hedging adds enough value in the long term weighed against the cost of hedging, so we maintain the underlying exposure currencies of equities in the portfolio (see currency related FAQ in this regard).
- We quite simply like to overweight countries or sectors which have underperformed and have become cheap (often due to recent underperformance) and underweight those which have done very well or become expensive. We’re not avoiding positive trends by definition, but we are cognisant that markets ebb and flow and often become overbought or oversold; presenting opportunities to tweak exposures in favour of assets which have become cheaper. Buy low, sell high but don’t cut winners too early or catch falling knives too soon.
- We are humble with respect to how hard it is to add “alpha” (i.e. outperformance) so we size our positions appropriately by not taking concentrated positions as well as by considering cross-asset correlations carefully.
- We do not let emotions get in the way of our decision-making processes and follow internal rules and protocols to ensure the emotional aspects of investing are considered carefully. We like to take advantage of inherent human biases which cause many investors to panic or become too exuberant at the wrong times.
How do I get information about how my investment is performing?
On a monthly basis we publish a Fund Factsheet which provides information on how the Fund is performing.
On a daily basis the NAV of the Fund is published on the Prescient website at the link below, via other channels like Morningstar, the FT, or via your platform or bank which would have the most recent NAV. https://www.prescient.ie/funds/unit-prices/
How much turnover is there in the fund and what are the transaction costs?
Turnover varies but generally it is quite low. About 10% -20% of the fund’s positions might change during the year due to rebalancing or tactical shifts we make. Additionally, we reduce transaction costs substantially, such that direct commissions are almost zero, by trading directly with large established market makers and liquidity providers (using request for quote or “RFQ” platforms), into which we integrate using leading trading technology.
What is an ETF?
An ETF is an Exchange Traded Fund. As the name implies an Exchange Traded Fund is a fund which trades on an exchange. Historically most ETFs have tracked well known indices by buying all or almost all the stocks or bonds that constitute an index, although today there are many variants. ETFs provide a simple, cost efficient way to gain a diversified exposure to a basket of stocks or bonds without having to go and buy every single one yourself.
One of the many advantages of ETFs over many traditional ‘active’ mutual funds is that they can be traded on a stock exchange during the business day as opposed to just once a day. ETFs generally charge much lower fees, trade their underlying holdings much less frequently thus saving trading costs. They tend to be more diversified and are often much more transparent than other mutual funds as they normally disclose all their holdings on a daily basis.
What is a UCITS fund?
UCITS is the acronym for “Undertaking for Collective Investment in Transferable Securities”. UCITS is a regulatory framework of the European Commission that creates a harmonised regime throughout the EU for the management and sale of mutual funds. UCITS funds can be registered in the EU and sold to investors worldwide using unified regulatory and investor protection requirements. UCITS fund providers who meet the standards are exempt from national regulation in individual EU countries. Although UCITS were initially intended only to be marketed across the European Union, the UCITS brand is now recognised as the only truly globally distributed investment fund product. As a result, an increasing number of asset managers are establishing UCITS funds with a clearly defined global distribution strategy.
A growing number of countries in Asia and Latin America have accepted UCITS as providing a stable, high quality, well-regulated investment product with significant levels of investor protection.
Where are the assets in the fund held?
The depository (or custodian) of the Fund’s assets is Northern Trust which is one of the largest and most established depositories in the world. Omba only has authority to transact on these assets as the investment manager but we have no authority to wire your money or assets out of the fund. Prescient Fund Services (Ireland) Limited, as administrator and manager, handle all subscriptions and redemptions independently of Omba. The Central Bank of Ireland is the regulator for the Fund.
What has past performance been?
Please see the Fund Factsheets and MDD documents on this website for performance history.
Does the fund have UK reporting status?
Yes, the GBP and USD share classes do have UK reporting fund status.
What is the difference between the Distribution share class and Accumulation share class?
The Distribution class of the fund, as the name implies, distributes all dividends paid by the ETFs to the investors (less any expenses). So, as the ETFs earn dividends and interest from the underlying equities and bonds, they in turn collect and distribute all of those to investors (after applicable withholding tax has been deducted). The Accumulation share class, however, accumulates (rolls up) the dividends paid from the ETFs into the fund and so the Net Asset Value (NAV) of the fund rises by this increase in cash. This cash is then re-invested into the underlying portfolio of ETFs within the fund.
What's the difference between the Euro, Dollar and Pound Sterling share classes?
The only difference is the reporting currency. The underlying investments for all 3 of these currency classes are the same and we do not hedge the currency exposure back to the reporting currency. This is important to understand as it means the fund primarily has USD exposure (through the bond holdings which are mainly denominated in USD).
Do you hedge the underlying foreign currency exposure of the equity holdings?
For the equity exposure of the Fund we retain the underlying currency exposures of the equities. We think currency hedging is a futile and expensive exercise for several reasons.
- Currency hedging costs money and you pay this to the executing broker year after year and over time the impact of this cost drags on return.
- When hedging the non-base currency exposure of equities, you are in effect assuming that the companies you own in the country or region, which are not in the country or region of your base currency, generate all their profits in that particular currency. This is completely false. If you are a British investor with a GBP base currency and you own an S&P 500 Index ETF you would be wrong to say all your exposure is to the USD. Let’s list some companies in the S&P500 which we know for sure have global, not only USD earnings…McDonald’s, Amazon, Google, American Express, eBay, Estee Lauder, General Electric, Johnson & Johnson, Microsoft, Nike…and the list goes on. Therefore, it does not make sense to hedge the USD exposure back to GBP.
- Further to the point above, many of the large multinational companies you’d indirectly own in your portfolio will have in-house treasury teams potentially hedging their revenue streams or costs in other currencies. i.e. the companies themselves could choose to keep or not keep certain currency exposures in their business. By doing a portfolio hedge you could indirectly be increasing or further reducing exposure to a currency exposure already dealt with or not dealt with by the company. The pass through of revenue and expenses in other currencies to a company’s earnings would be reflected in the changing share price linked to those earnings.
- Currencies generally mean revert (in layman’s terms – move back to their long-term trend) due to the fact that economic theories like Purchasing Price Parity (PPP) and Inflation Rate Parity often hold true over long periods of time. Our investors’ time horizon is long-term and thus retaining the underlying currency exposure of the assets into which they invest is something we recommend.
- It is true that there is increased volatility at a portfolio level due to the fact that non-base currency exposures can cause greater swings up and down in a portfolio when measured in a particular currency, but this does not concern us as the long-term goal is to generate positive real returns (i.e. above inflation) as measured in any currency.
- We, and many academics, would argue you should be diversified by region and asset class to achieve optimal risk adjusted portfolio returns. In the same vein, currency diversification is also a powerful tool to preserving long term wealth to pass to future heirs. Nobody knows which currency will perform the best in the next 10, 20 or 50 years. In a world where geo-politics, economics and trade in goods and services is always changing, we argue, as part of keeping diversity at the core of the investment approach, it should encompass currency diversification.
What is the weighted underlying Total Expense Ratio (TER) of the underlying ETFs?
This is approximately 0.25% but varies depending on the ETFs’ Total Expense Ratios and how they change. It is also based on the underlying weightings of each ETF within the fund which vary over time.
Does Omba earn any other fees, directly or indirectly?
We only earn one single fee of 0.30% which is charged to the Fund. Nothing else. Simple as that. For our selection of credible ETFs, strategic and tactical asset allocation, portfolio monitoring and rebalancing and all the administration and research included in these processes we know this is a fair and extremely competitive fee.