New sports fund ready for kick-off
A sound vehicle or ethically dubious? Chiara Cavaglieri reviews both sides
Sunday 28 March 2010
There is no doubting that sports betting is very popular and big business, but could it ever really be described as an investment?
Well, fund-management group Centaur Global would like you to think so, as it is to launch – on 31 March – the UK's first regulated sports fund. The Galileo Absolute Return Fund, described as an "experienced investor fund", aims to tap into the sports-betting markets, rather than the financial markets.
Centaur has been running similar, unregulated, funds for the past 10 years, and can boast some impressive results. The Centaur Sport funds have claimed returns in excess of 40 per cent per annum over the past five years. The Galileo fund will focus predominantly on football and other major sports, including tennis and rugby, but Centaur is quick to quash any accusations that they are providing a gambling service.
"We're not a gambling company, we're a trading group, but our markets happen to be sports probability and statistics," says Tony Woodhams, managing director at Centaur Group. What's more, Mr Woodhams says that, crucially, sports markets aren't related to other asset classes – such as shares or property.
"It's an economy proof environment," he says. "The gambling industry is pretty resilient; when times are bad people tend to bet as much, if not more than they did in good times."
The fund trades on global sports exchanges including Betfair, Betdaq and Sporting Index.
"Returns are linked to bets that people are making and the arbitrage [the pricing differences] between the various bets made. The description as a sports fund is disingenuous in that sense," says Danny Cox, from independent financial adviser Hargreaves Lansdown.
However, this is actually where the potential of this fund lies. Armed with the right tools and expertise, an investment team can potentially reap the rewards of an industry that has much of its emphasis based around emotional connections, rather than logic. But what expertise can you expect from the Centaur team?
Centaur says that they will make their money trading on football statistics and probabilities. This works through analysis of various technical and historical data; from examining players, teams or weather to using sophisticated software that holds 10 years' worth of data. This is all then referenced against actual prices in the market to identify any value.
Essentially, the investment team behind the fund will be on the hunt for statistical anomalies and will scour the markets for the best deals and stand-out prices.
This all sounds very clever, but other aspects of the fund aren't quite as reassuring. First, although the group is authorised by the UK Financial Services Authority, it's not regulated by it, so investors will have to rely on Gibraltar Financial Services Commission for protection.
"Investors should only consider this once they are fully aware of the protections they have as it is backed by the Gibraltan government. The total amount of compensation is below UK levels at the sterling equivalent of €20,000," warns Adrian Lowcock, from independent financial adviser (IFA) Bestinvest.
There is also the significant issue of whether investors are comfortable with putting their money in a fund that takes profits from gambling. As well as being high-risk – and, some would say, ethically dubious – the fund is also very expensive to run. It levies a management fee of 3 per cent per annum, a 30 per cent performance fee and stiff early-redemption penalties, starting at 5 per cent in the first year, then falling 1 per cent each year until it reaches zero.
The minimum initial investment of €100,000 (£90,000) is yet another major stumbling block for all but the wealthiest investors, and any additional investment must be the equivalent of at least €25,000.
There are ways around this, however, so if an IFA, for example, wants to put lots of clients into the scheme, it can pool funds together, and as long as that wrapper amounts to the £100,000 minimum, it's irrelevant how much each individual puts up.
Derek Pain: I'm cautious, but remain one of the few bulls in the market
Donald MacInnes: Who would want to be a Barbie girl in a non-Barbie world?
Mark Dampier: How to get an income now that savings are past the 'use by' date
Thousands of UK investors could lose out following collapse of Secured Energy Bonds
Bargain Hunter: Fly off for a winter break in France or Portugal for well under £100
- 1 Venezuela Expo Tattoo 2015: Extreme body art from 'Vampire Woman' to 109mm earlobes
- 2 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 3 Ball pool for adults opens in London
- 4 Amal Clooney gives excellent response to fashion question at European Court of Human Rights
- 5 Rashida Jones speaks out against male-centric porn saying 'women should have sex and feel good about it'
9 reasons Greece's experiment with the radical left is doomed to failure
Have we reached 'peak food'? Shortages loom as global production rates slow
Greece elections: Syriza and EU on collision course after election win for left-wing party
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
King Abdullah dead: We can't afford not to hold Saudi Arabia's royals to account
iJobs Money & Business
£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...
£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
Day In a Page
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion