Moneyfarm is the latest wealth manager to bring low-cost, passive investment strategies to market, having launched a range of fixed allocation portfolios with five different risk levels.
The portfolios cost between 42bps and 47bps; broken down into a 25bps management fee, fund costs of between 15bps and 20bps, and a 2bps spread for both the classic and socially responsible ranges.
It marks the first time Moneyfarm has offered passive strategies, with the wealth manager describing the range as suitable for “more experienced investors who understand market fluctuations and long-term investing”.
There will be no tactical changes to the portfolios, and they will be rebalanced annually. However, if a portfolio allocation drifts too far from the models, it will be rebalanced. Moneyfarm said this approached means the portfolios require less time to manage, hence the low cost.
Richard Flax, chief investment officer, said: “We have been very successful with our active and socially responsible portfolios, but identified a gap in our product range. That is why we have launched a range of fixed-allocation portfolios that offer the same simple and intuitive digital investment experience to clients who are more confident and understand market volatility.”
Giovanni Daprà, co-founder and CEO, added: “We constantly look at how we can improve our proposition and service to clients, adding more investment options as the socially responsible ones that we launched last year. But one area that we know was missing was the ability to offer fixed asset allocation portfolios.
“Fixed allocation portfolios aren’t for everyone as they are only rebalanced once a year, so tend to be appropriate for more experienced investors and those who are more cost conscious, that might not necessarily believe in the value of active management […]. We have tested the offer with clients and they are very keen to have this as an option.”
See Also: M&G acquires minority stake in Moneyfarm
