On 30 October Quilter Cheviot will mark the 25th anniversary of its managed portfolio service (MPS) by launching a new Liquidity MPS.
Liquidity MPS is intended to cater for clients with short-term capital needs by investing in high-quality money market funds. The new MPS will have a management fee of 0.10%.
The launch will be complemented by a redesign of Quilter Cheviot’s existing index-tracker portfolio offering, with the addition of three new funds. The index-tracker funds will be collectively rebranded as Index+.
Simon Doherty, head of managed portfolio services at Quilter Cheviot, said: “Advisers need investment solutions that deliver strong outcomes and demonstrate clear value for the costs and charges clients pay. The Liquidity MPS and Index+ range are designed to do exactly that, offering actively managed portfolios across risk profiles with distinct investment approaches and cost points.”
Antony Webb, head of MPS at the firm, continued: “Launching a liquidity strategy is no huge innovation, but it solves a lot of problems for advisers.”
Many advisers are signed up to discretionary arrangements with their clients, and would like to run it within a platform, but regulation and platforms are not always designed to facilitate this, Webb continued.
Additionally, many CRPs on the market, he argued, were essentially “rubbish” or “poorly designed” but are winning a huge amount of assets. Some propositions try to offer advisers a retirement proposition that has all of the upside of a medium risk portfolio, but none of the downsides of a bond allocation through cash, but it’s all “pure back testing”, he said.
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“What you’ll find at the end of it is a 70-year-old with a growth portfolio and, if you go into a recession at that point, you’re down 40%,” he said. “Try explaining that to your client.”
Ultimately, he noted every single client is different, as is their risk budget, and there is “no one size fits all policy”. Instead, the new changes are designed to help provide a more dynamic way of approaching MPS to reflect this.
“It’s about giving advisers choice, ultimately,” Doherty continued. “Choice about what advisers would rather use, something that is not just going down the well-trodden path of active passive blend in MPS.”
The redesigned Index+ MPS will span the same seven risk levels as Quilter’s existing Building Blocks MPS. Building Blocks comprises actively-managed geographic or asset-class exposure, combining direct equities, bonds, and external fund holdings.
Index+ will allow integration with the Building Block structures to provide a degree of active management within an otherwise index-linked structure. Managers will also actively assign the overall asset allocation within each portfolio, with fees ranging from 0.28% to 0.37%.
Doherty continued that the big differentiator compared with other MPS approaches in the space, was that the firm’s alternative allocation was powered by their Building Blocks MPS exposure, rather than relying on a purely equity and bond approach.
“Our Building Block funds have strengthened our fully active MPS, and we are pleased to be utilising them across what is now a full suite of index-tracking strategies. The funds were designed to improve transparency and enable portfolio construction cost-effectively, and their performance over the past five years reinforces our confidence in the approach.”
This story was written by our sister-title, Portfolio Adviser
