No it’s not; and won’t be for six months at least, and longer still before we see whether the seismic changes predicted – such as the reduction by up to 15,000 in the number of advisers plying their trade – have arrived.
But there is one trend that could be bubbling just under the surface and that is the move towards even greater use of funds that in some way replicate, track or follow an index.
Out-and-out index-trackers, exchange-traded products of all kinds and the more sophisticated derivatives-based propositions are all different ways for a portfolio manager to cheaply track an index – the key skill used to be identifying the index; it is now as much about how to track the index.
This is nothing new – Legal & General and Barclays have been running their vast books of institutional pension and annuities business this way for years with – and retail investors have been doing something similar for nearly as long.
But what RDR may well do is encourage private client portfolio managers to look a bit more closely at some of the fund structures available given the new emphasis on transparency, clarity and low cost/value-for-money.
For example, a new entrant to the UK retail world is Mansard Capital, a company set up in 2010 that was recently appointed by Caerus Capital to run a £130m mandate. Mansard Capital was chosen specifically for its expertise in managing index exposure with Caerus Capital’s investment director, Ronan Kearney, expressly saying that the reason for the conscious move from Evercore Pan Asset to Mansard is the switch from ETFs to indices.
Evercore typically has an already-cheap annual management charge of around 0.4%, with Mansard shifting this down to 0.25%.
And then there are the model-driven propositions, such as the £3bn Royal London FTSE 350 Tracker Fund with an AMC of 0.1%. Rather than track the index, manager Vicky Harriss look to track the total return of the FTSE All Share Index, thereby reducing the cost of full replication.
Schroders is no stranger to any of these markets or product structures and one of its best-kept secrets, as far as wealth managers are concerned anyway, is its QEP team, running quants-based equity strategies. Its Global Core fund, for instance, has an AMC of 0.35% contributing to a total expense ratio of 0.4%.
As I said at the top of this article, none of this is new; what may be new to portfolio managers post-RDR is how often they ask themselves the question: “Why pay a fund manager to track an index?”.
