Brewin Dolphin is to slash charges on its managed portfolio service (MPS) and launch four funds in a move designed to save clients millions.
The cut in the ongoing MPS charges ranges from 17% to 27% across its five core models (see table below).
|MPS Model||Before (bps)||After (bps)||% reduction|
Brewin will pass on all cost savings to advisers clients', which will save them around £3 million a year following the change.
Manager of manager of range
At the core of the restructure is four new manager-of-manager funds that will allocate a proportion of each fund to a range of third party managers.
The four funds cover UK equity, UK Equity Income, North American Equity and Global Bonds, with the managers appointed in shown in table below.
While a lot of the managers are already accessible through the MPS, there are a number of new names available through the manager of manager funds.
|Fund||Fund house||Manager name|
|UK Equity||Investec Asset Management||Alastair Mundy|
|JP Morgan Asset Management||Team based|
|Lindsell Train||Nick Train|
|Miton||Gervais Williams/Martin Turner|
|Old Mutual Global Investors||Richard Watts|
|UK Equity Income||Columbia Threadneedle||Team based|
|Investec Asset Management||Blake Hutchins|
|Man GLG||Henry Dixon|
|North American Equity||Baillie Gifford||Tom Slater and team|
|JP Morgan Asset Management||Clare Hart|
|Global Bonds||Deutsche Asset Management||Team based|
|Insight Investment||Harvey Bradley and team|
|Pimco||Ketish Pothalingam and team|
Brewin said a 'carefully orchestrated' plan will see around 60% of MPS assets transferred to the new structure between February and May 2018 using a monthly re-balancing schedule.
Approximately 40% of the remaining MPS assets (some overseas equities, property and absolute return) will remain unchanged and continue to be invested in third party retail funds.
The MPS currently controls around £2.3 billion in assets, meaning by the end of May £1.4 billion will be held in the manager of manager funds.
The estimated costs on the Bond fund based on the level of assets at the end of the transition period is 0.28%. On UK Equity Income, UK Equity and US Equity funds the costs will be 0.56%. 0.475% and 0.58% respectively.
The current charge on the MPS plus VAT in the clean fee structure is 0.3%.
Brewin said the new structure has been created to make the service scalable, meaning further savings could be passed on to clients in the future.
It highlighted the new structure should see lower transaction costs should decrease due to the lower portfolio turnover.
For example, if the firm decides to change a manager on the manager of manager funds, there is no need to sell down and reinvest the proceeds in a new fund. The management of the assets within the funds can simply be taken up by a new manager.
Brewin head of research Guy Foster also pointed out to Wealth Manager that if a fund soft closes the manager can continue to run the manager of manager mandate, unlike within the MPS where the fund would have to be sold.
Brewin managing director of investment solutions and distribution Robin Beer added: 'Brewin Dolphin’s MPS has reached a scale where our advisers’ clients can benefit from the reduced fees associated with large mandates rather than pooled retail funds.
'We’ve had this structure in our minds for a few years now, and once the assets rose to a level that would be attractive to third party managers, we’ve implemented it.
'As well as reducing the cost to our advisers’ clients, the new operational structure will ensure our investment decisions can continue to be implemented efficiently.'
The funds will be available on all 11 fund platforms currently offering the MPS service. Brewin said there would be no change in the investment process on the MPS.