BMO Gam upsizes low-cost range to rival 7IM and AJ Bell

Paul Niven’s range has amassed £300m since launch two years ago

Paul Niven, F&C IT manager

BMO Global Asset Management has doubled the number of funds in its £300m low-cost multi-asset range as it steps up competition with rivals such as Seven Investment Management, AJ Bell and Vanguard.

Three portfolios have been added its actively managed, low-cost Universal Multi-Asset Portfolios (Map) range: the BMO Universal Map Income, Defensive and Adventurous funds.

All will be capped with on-going charges figure of 0.29%, which has been the fee level since launch in late 2017.

There are now six funds in the range, which invests globally, in individual securities, derivatives, collective schemes and ETFs. It uses tactical and strategic asset allocation.

7IM and AJ Bell among rivals

Chelsea Financial Services managing director Darius McDermott said: “They clearly feel there is demand for this type of product. It also complements their other multi-asset range, which is fund of funds.

“The like of 7IM, AJ Bell and Vanguard are their competitors,” McDermott said.

Willis Owen head of personal investing Adrian Lowcock said BMO Gam is targeting the adviser market so the main contenders as competitors include Architas, 7IM, Premier, Standard Life and Vanguard.

Last month, 7IM launched a multi-asset passive model portfolio range charging 0.15% a year.

In January, AJ Bell announced it was cutting fees for its Balanced fund, the largest in the range, to 0.40%. It also slashed the OCF on its next largest funds, Adventurous and Moderately Adventurous, from 0.5% to 0.44%. However, in February, the firm also said all six passive funds would have an OCF cap of 0.35% with an annual management charge fixed at 0.15%.

Keeping adviser costs low

BMO Gam has highlighted that the range is a response to fee pressure faced by advisers.

“By keeping investment costs low, advisers can demonstrate the value they add through financial advice, alongside investment management,” said head of distribution Rob Thorpe.

“Historically, advisers have faced a binary choice – low-cost and passive, or active. This limits choice for investors,” Thorpe said. “These three new funds ensure our Universal Map range can be accessed by more investors, fulfilling a wider range of risk and income requirements and enabling more investors to access potential returns from active strategies at minimal cost.”

Lowcock added: “This range differs in that is actively managed range so doesn’t use passives. This matters as the pricing point, whilst low is higher than a pure passive range is. However, it is competitive and will be attractive for advisers and their clients who want to get some active exposure.

“This area is very competitive and appeal to the adviser community it is important to have an attractive price, offer a full range and for risk to be managed within set ranges to ensure they can fit in the whole spectrum of the ratings companies.”

Paul Niven adds weight to range

The three new funds will be managed by BMO Gam’s multi-asset investment team, headed by Paul Niven (pictured), who has run the existing range since launch.

McDermott said: “Paul Niven is an experienced multi-asset manager and I think they have a strong chance of succeeding in this market.”

Niven said: “Our strategic asset allocation is assessed on a quarterly basis to provide a dynamic approach to core allocations. Tactical allocation allows for more frequent adjustment of the portfolio to take advantage of market opportunities as they arise. We also make use of active stock selection in our equity and fixed income exposure.”

The funds

Of the three funds, the income fund aims to deliver an annual income of between 4-4.5% per annum, paid quarterly, with a balanced annual volatility target of between 8 – 10% over the medium to long term, while the defensive fund targets a defensive annual volatility level of 4-6% over the medium to long term.

The adventurous fund targets a higher annual volatility level of 12 – 14% over the medium to long term.

In a press release, BMO Gam said the new funds all have return expectations in excess of CPI and complement the existing fund range, which includes the BMO Universal Map Cautious Fund, BMO Universal Map Balanced Fund and BMO Universal Map Growth Fund.

BMO Universal Map launched in November 2017 and will provide advisers with investment strategies to suit cost-focused investors. Most low-cost solutions for investors are built using passive strategies but BMO’s range is actively managed.

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