The product will invest primarily in cash, corporate bonds and emerging market debt, all though ETFs. The underlying average flat yield of the bonds is estimated at 4.9% before costs.
No more than 25% of the portfolio will be invested in any single ETF, while the criteria also extends to no investments in short or leveraged ETFs, nor ETFs with less than 100% collateral. All ETFs are LSE listed and no more than 50% will be invested in foreign currency funds.
Following its two year anniversary, SCM is also dropping its 5% performance fee for direct clients in its two existing portfolios, Absolute Return and Long-Term Total Return. Direct clients will be asked to pay an AMC of 0.5% plus VAT for investment in the new bond product.
Ex-New Star chief investment officer Miller spoke of his firm’s philosophy of passing on the benefits of its “lean and mean” structure to clients, rather than just to shareholders.
“The performance of our two existing portfolios demonstrates the benefits of removing layers of needless fees and costs, whilst emphasising active asset allocation and total transparency,” he said.
“The complacent traditional fund management industry would do well to sit up and take notice of a new modern approach to fund management.”
A review of the current state of the ETF/ETP market will feature in the forthcoming July edition of Portfolio Adviser.
