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New low-cost wealth firm to cash in on 'science of capital markets'
by Elsa Buchanan on Aug 01, 2013 at 14:08
Former Santander private banker Manuel Cabrejas is seeking to veer away from what he describes as the traditional speculative investment model in favour of 'the science of capital markets' with his new low-cost wealth management venture.
Manchester-based Mamucium Capital Management aims to eliminate what Cabrejas refers to as the 'potentially hazardous stock-picking and market timing risks' made by traditional and expensive active manager models.
Mamucium offers financial planning and investment management and was founded on Cabrejas' belief in the growth of exchange-traded funds (ETF) and index-based markets. He invests in these lower cost strategies, driven by his asset allocation. The firm charges 1.5% per annum, which includes adviser, platform and fund management fees.
'Compare that to a 3.6% actively managed fund, and you have an exiting story for investors,' Cabrejas told Wealth Manager.
Cabrejas has over 15 years' experience in the industry, having enjoyed spells at Mashreq Bank, Al Dana Wealth Management, Commercial Bank of Dubai’s private bank, alongside Santander Private Bank. In the United Arab Emirates, he also advised the royal family. However, after this time he grew dissatisfied with the industry’s approach to client fiduciary relationships and high-fee investment management and relocated back to the UK from Dubai to set up Mamucium.
‘The UK retail investors are lagging behind the US in terms of the adoption and use of ETFs,’ Cabrejas told Wealth Manager.
He explained markets saw a $650 billion flow into index funds and $350 billion flow out of active funds over the last six years, adding: ‘That’s a $1 trillion swing in investor sentiment towards indexing.'
‘Investors also have grown dissatisfied with our current investment models, especially when it comes down to hidden costs, with mainstream investment firms charging between 3.4% and 3.6% annually,' he added.
Mamucium uses Vanguard’s static asset allocation index funds for his low-cost index strategy, Evercore Pan-Asset model for his tactical strategy and Dimensional Fund Advisors for his enhanced strategy, while all financial planning and asset allocation is done in-house.
‘In this post-RDR world, we are now using total cost of investing [TCI] as a base to our fees,’ he added.