The service, launched today, is currently available to advisers through Thomas Miller’s Pershing platform though the firm has confirmed it is exploring options with other platforms.
Clients with more than £50,000 of investable assets will be able to access a range of six portfolios – from Fixed Income and Cautious at one end of the risk scale to Growth and Equity at the other – that invest in a combination of direct bonds and equities as well as collectives.
Andrew Herberts, deputy head of private investment management at Thomas Miller, said that they tend to buy equities for UK exposure and collectives for overseas and specialist investments. On the fixed income side, they buy government debt direct, using collectives for corporate debt.
Where they feel it is appropriate, the portfolio will include passive investments on top of the core direct holdings.
Herberts added that this offering was put together on the back of conversations with IFAs who felt some of their some concerns were still not being addressed.
The otherwise disenfranchised
He explained: “A lot of companies in the wealth management and DFM space are not that interested in clients with less than £250,000/£500,000 so there is a bit of a gap between these individuals and those with closer to £50,000. Using our managed portfolio service means Intermediaries can still justify their adviser charge, keep the client relationship and outsource the investment management.”
The annual management charge is 0.4%, plus any extra platform charges, which Herberts added gives advisers access to the same investment ideas and engine that its institutional clients receive.
As a result, the portfolios are run by an investment strategy team that formally meets monthly, when it will make any tactical changes, although stock selection can be made daily. Formally the equities team meets fortnightly.
The initial work to build the portfolios was, according to Herberts, driven from the risk side looking particularly at standard deviation and value at risk. The asset allocation is the output from the risk/return analysis carried out.
A similar process sits behind the full discretionary management service which is available for private clients with assets above £250,000.
Head of private investment management, Harry Morgan, explains the DFM proposition on page 17 of May’s issue of Portfolio Adviser.
Clients can move from the managed to a discretionary service with the firm with, as Herberts pointed out, the intermediary maintaining the client relationship because “Thomas Miller does not do financial planning”.
As an example, the benchmark allocation for the Balanced Portfolio is 35% in fixed income, 30% in UK equities, 20% in international equities, 10% in alternatives and 5% in cash.
