Aviva Investors and Vanguard are taking a cue from other fund groups and channelling their energy and efforts into model portfolios, following predictions adviser demand will skyrocket.
Aviva revealed on Monday it was launching Aviva Retirement Portfolios, its first ever model portfolio service.
The range has been designed in collaboration with SimplyBiz and represents the first fruits of Aviva’s multi-year managed distribution deal with Fintel, SimplyBiz’s parent company, which was struck last November.
The MPS will be managed by Aviva’s multi-asset team and forms part of SimplyBiz’s range of risk-controlled solutions. It will be exclusively available on the Aviva Platform.
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Vanguard adapts Lifestrategy funds into dual MPS range
Following hot on the heels of Aviva’s announcement, Vanguard announced it would be adapting its hugely popular Lifestrategy mutual funds into the MPS format.
Vanguard Lifestrategy MPS Classic is made up of five model portfolios that mirror the design of the Lifestrategy mutual funds, which invest in global equity and fixed income markets via a portfolio of index funds.
Like the existing range, equity exposure will range from 20-100%, depending on the risk profile, and will have a tilt to the UK in both the equity (25%) and fixed income (35%) segments.
For UK investors who prefer a more global approach, it has also launched the Vanguard Lifestrategy MPS Global. These portfolios are market-capitalisation weighted, without a tilt to the UK.
Neil Cowell, head of UK intermediary distribution at Vanguard, said the ranges are designed to give advisers with a preference for model portfolios access to the Lifestrategy offering.
“Since its launch in 2011, LifeStrategy has formed the bedrock of many financial advisers’ centralised investment propositions, resulting in over 4,000 adviser firms using the range to deliver low cost, broadly diversified, uncomplicated, multi-asset investing to their clients. We are delighted to be able to now offer the range in model portfolio format as part of our ongoing commitment to supporting financial advisers.
“Our LifeStrategy MPS Classic and LifeStrategy MPS Global model portfolios are designed to give advisers the choice of wrapper and asset allocation that best meet their needs and preferences.”
Around half of UK wealth managers plan on upping MPS use
Aviva and Vanguard’s push into the MPS market comes as demand for cookie cutter portfolios is expected to soar.
Research from Cerulli, also published Monday, shows 46% of UK wealth managers plan on using model portfolios more extensively over the next 12 to 24 months. This compares to just 2% that plan to decrease their use over the next two years.
Cerulli said greater efficiency and commercial considerations were driving the uptick in adoption of model portfolios in the UK wealth management space, with more advisers looking to outsource their investment propositions.
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“The increased use of model portfolios, from an adviser perspective, is the simplification of propositions and business, allowing for greater efficiencies and scalable client management—and ultimately, cost reduction,” said Fabrizio Zumbo, director, European asset and wealth management research at Cerulli Associates.
“Advisers can also ensure that their clients are invested in line with the house view, creating greater consistency of client outcomes.”