Schroders’ latest investment solutions offering has been heralded as “good pedigree” and competitive on costs, but does its offer enough to lure advisers away from the traditional route of using a discretionary fund manager for their model portfolio services?
On Wednesday Schroders announced the launch of a series of low-cost multi-asset funds and model portfolios to become available on platforms next month following adviser demand.
Schroder Investment Solutions will be overseen by Alex Funk (pictured) who has been named as chief investment officer of the new service, with support from a team of investment experts.
Funk and his team will also work with Schroders’ £169bn multi-asset team, led by CIO Johanna Kyrklund, and its economics team, and receive independent research from Rayner Spence Mills Research.
The MPS range will be available from 5 May comprising the nine Schroder Active, nine Strategic Index and six Sustainable portfolios with an annual management charge of 15bps with no VAT. An income portfolio will also be available.
Two multi-asset ranges will be available from 27 May: the five Schroder Tactical Portfolios and the six Schroder Blended Portfolios.
Funk said: “We are today bringing together the best of breed investment solutions. Financial advisers need to access a range of solutions at different risk profiles, price points and investment objectives and this is exactly what Schroder Investment Solutions offers.”
Detail on costs
The ongoing charges figure (OCF) for the Schroder Active Portfolios will be between 0.57% and 1%, the Strategic Index portfolios will be between 0.25% and 0.28%, while the Sustainable Portfolios will be between 0.68% and 0.98%.
The Schroder Tactical Portfolios will be capped at 29bps and, according to Schroders, will offer investors access to funds traditionally unavailable to retail investors, and use passive funds where appropriate.
The Schroder Blended Portfolios have been rebranded from Schroder Portfolios to reflect their allocation to active and passive funds. The Schroder Blended Portfolios carry an OCF of between 0.76% and 0.95%.
Growing demand for large brands
Boring Money founder and CEO Holly Mackay said her firm’s research found two major drivers of customer demand in 2021 – a growing intolerance of high fees and an interest in sustainable solutions.
Mackay said: “Although the market is busy, I think there will be growing demand for large global brands which can offer multiple ready-made solutions, graded by both risk and sustainability metrics, and offering choice in terms of active or passive preferences.”
How will advisers take to an asset manager provider of MPS?
CWC Research managing director Clive Waller said the MPS market is becoming more crowded and competitive, especially on price, but the Schroders offering “looks pretty good all round – a good pedigree, competitive cost and a credible sustainable option should combine to appeal”.
However, Waller said it will be interesting to see how advisers take to an asset manager provider of MPS.
“Historically, they have preferred to outsource to DFMs rather than multi-manager Oeics, which are often a superior solution,” he said. “Will it be different with this MPS? Schroders have huge research resource and have added RSMR for independence.”
‘Ready-made’ ESG services help product selection
Commenting on the sustainable models, Mackay added “ready-made” ESG services which can be mapped to client preferences should do well given labelling and disclosure on products is difficult to use to support the selection of products.
“For any individual adviser to wade through all the jargon, inconsistent naming and greenwashing, and attempt to blend a consistent coherent and robust model portfolio themselves is a headache in the making.”
