Back in February 2012 GAM announced Hepworth was joining to spearhead the development of its new Model Portfolio Service (MPS) aimed at IFAs looking to outsource investment decisions.
He had worked at Quilter for over 17 years, heading up its MPS from 2001 onwards. Hepworth started at GAM in May and the five-strong range of model portfolios launched in November.
The most distinct difference between the GAM proposition and the portfolios he ran at Quilter is the fund of funds structure, Hepworth said.
This has a couple of advantages, firstly there is no VAT charged on the fund versus segregated portfolios, and secondly, funds can be rebalanced daily rather than the common quarterly re-balancing of segregated portfolios.
Quilter’s proposition
Quilter, he explained, sold its funds business way back in 2004 to Neptune, a fact Quilter confirmed, and so could not have supported the fund of funds structure.
Since Hepworth left, however, Quilter has signed a deal to merge with Cheviot Asset Management, with the two companies coming together later this year.
Cheviot will bring with it three multi-asset funds – the Libero Balanced, Libero Cautious and Libero Strategic – a sustainable investment Climate Assets Fund and the Cheviot Balanced Fund, which is a fund of funds.
‘Unloved IFA market”
Hepworth said the model portfolio service (MPS) at GAM was designed to cater for the small end of the IFA market, an “unloved” sector that does not get enough service – anyone with £25,000 or above to invest.
Another difference between his proposition and existing offerings in the market place is the full break down of holdings and asset allocation, which IFAs can download at any time.
“We do not just send them a monthly factsheet. It is a full breakdown starting from when the client invested and how much they have in each investment within the fund. Some other groups are alleging they provide in-depth information like this, but I have not seen anyone else with such transparency.”
Portfolio Adviser’s Gary Shepherd last week called for greater transparency and real-time fund data – do you agree with what he had to say?
The funds are registered under the GAM Stars Dublin-domiciled Sicav. The sterling share classes have an AMC of 85bps and a total expense ratio of 1.7% to 1.8%, which Hepworth said is competitive compared to other fund of funds. (If you disagree please let us know in the comments box below).
Hepworth said they are run within volatility ranges and risk-rated by Distribution Technology.
A significant allocation to absolute return funds is another aspect Hepworth believes sets him apart from his competition. He said investors should not hold only one type of absolute return strategy, but rather blend a number of strategies.
Check back with us to see the five absolute return strategies getting Hepworth’s seal of approval, up on the site soon.
Do you outsource to Quilter’s model portfolio service? Let us know what you think of it versus Hepworth’s proposition in the comments box below…
