By Dylan Emery Investec Guinness Flight has launched an offshore fund that tracks the Wired Index, a.

By Dylan Emery

Investec Guinness Flight has launched an offshore fund that tracks the Wired Index, a 40-stock index which aims to identify companies making a successful transition into the digital age

The Wired Index fund is a Guernsey-based, dollar-denominated fund. Its price was set at $20.61 on 2 August and it was launched on 7 September, having been pre-marketed in South Africa

The fund size is currently $10m. Its sister fund, a US mutual fund that was launched on 15 December 1998, has assets under management of $120m

The minimum lump sum investment for ‘A’ shares ­ which have an initial management charge of 3% and a 1% annual fee ­ is $3,000, £2,000 or HK$50,000. ‘B’ shares have a $250,000 floor, a 0.75% annual fee and do not incur any initial charge. The fund will track the index weighted according to market cap

To prevent giants like Microsoft dominating the index, a $10bn ceiling is applied in the calculations. A consequence of this is that the five largest stocks constitute a third of the index capitalisation while the 10 biggest take up just under half

Overall responsibility for the Wired Index, which has been co-branded by US magazine Wired and Investec, belongs to the Wired Steering Committee. The two key members are Wired European editor John Browning and Spencer Reiss, a contributing editor. The manager of the Investec fund, Doug Blatch, is a non-voting member

The committee suggests that as the industrial economy gives way to the digital revolution there will be a change in the structure of the markets as radical as when the agrarian economy was transformed into the industrial one. It tries to capture the effects of this revolution in its choices

The fund tracks 40 stocks, all of which should exhibit at least one of five qualities: globalism ­ the exploitation of worldwide markets and open systems; communication (brand building, mindshare/networking, innovation); the creation and use of new ideas, speed and agility; technology (the adaptability to use new tools to maximum potential); and strategic vision (positioning a company advantageously and maintaining that position

The choice of stocks is at the subjective discretion of the committee, which takes informal advice from a mixture of academic economists and professional financial analysts

The index is rebalanced at the end of each year. Change is discouraged and companies are only removed from the index if they merge, are acquired or go bankrupt

When this happens the whole list is reviewed. Although the index lists obvious ‘digital age’ companies such as Intel, Microsoft and Yahoo. only about half are technology companies. The list also includes Monsanto, Wal-Mart and Walt Disney

In all, 25% of the companies produce electronics or computer hardware while 16.2% are labelled new media or internet companies. Financials occupy 15.4% of the index; retailers and leisure companies 13%. Natural resources and industrials make up 10.2%, 7.6% are transport and 7.4% biotechs

The capital return of the index is calculated daily, while the total returns are listed monthly. Investec Guinness Flight has contracted the quantitative techniques division of HSBC Securities to perform a variety of duties, including the daily calculation of the index

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