Sitting across three silos – ‘established’, ‘recommended’ and ‘positive watch’ – with starting lists of 21, 89 and seven actively managed funds respectively, former OBSR directors Peter Toogood and Gill Hutchison have stressed the service is not about ratings.
Monthly factsheets – approved by the fund managers – will be produced describing the team’s views based on quality, utility and value for money.
Window into research
“This is not a ratings service, it is about endorsements. You could say we’ve put a guided list together.” Toogood said, adding that advisers were getting “a window into what we are doing” as City's multi-asset team that helped them justify their propositions to the regulator.
The Adviser Centre is not designed as a revenue generating model; rather it has been set up as an added-value service for advisers to assist them in a post-RDR environment.
The service will invite cost contributions from fund managers wishing to use the endorsements of their products for marketing purposes at a rate of £20,000 per year, fixed for two years. A discounted rate of £7,000 per year applies to smaller groups with less than £2bn AUM in retail-facing funds.
The additional services offered by City Financial include bulletins, commentaries, blogs, and a tool to maintain a list of preferred funds.
All the fund research will be embedded within Distribution Technology’s Dynamic Planner tool, offering advisers an additional qualitative viewpoint. The two organisations also have future plans to create risk-profiled portfolios underpinned by DT’s asset allocation guidance.
Non-conflicted
Multi-manager research has been outsourced to Scopic in order to maintain independence. No City Financial funds will feature in the recommended buy list to avoid overt conflict of interests.
Toogood and Hutchison said they recognised the “ubiquitous” nature of using passive funds selectively within portfolio planning but looked to introduce passive research at the next phase of development, expected to launch in Q3.
“There are some sectors, such as US equities at the moment, which are obvious contenders for using passive funds, or possibly index-linked gilts. In other areas, our jury is out as to whether they outperform. But we intend to put more information together and will be looking at aspects like the quality and method of tracking, the tracking error and other features that affect passives.”
