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Brewin cuts extra costs as it hits halfway point in MPS overhaul

Brewin cuts extra costs as it hits halfway point in MPS overhaul

Brewin Dolphin has revealed extra cost savings as it reaches the halfway point in its model portfolio service (MPS) restructure. 

At the start of the year Brewin said it would be moving £1.5 billion of MPS assets into a new manager-of-manager service. It said the move was expected to save advisers' clients £3 million a year. 

In an update on the migration, Brewin said it had now transferred around £750 million into the segregated mandates, with two of the four transfers to the manager-of-manager service completed. The remaining two transfers are expected to complete by May. 

The firm also revealed that on top of the ongoing underlying cost reduction, it has achieved one off cost savings via two institutional cross trades that has saved advisers’ clients and estimated £150,000 in transaction costs.

Brewin managing director of investment solutions and distribution, Robin Beer (pictured), said: 'In addition to the ongoing cost savings, we’ve been able to save advisers’ clients an estimated £150,000 of transactions costs so far as two fund managers were able to match around £45 million  with a seller of the same assets.

'By ‘swapping’ the assets with the seller rather than buying them on the open market, we have avoiding significant purchasing costs. That’s another advantage of our manager-of-managers approach.' 

The cut in charges in Brewin's MPS charges ranges from 17% to 27% across its five core models (see table below).

 

MPS Model Before (bps) After (bps) % reduction
Cautious 63 50 21%
Income 65 52 20%
Balanced 62 52 17%
Growth 69 55 20%
Global Equity 69 51 27%

 

At the core of the restructure is a new four-strong manager-of-manager fund range 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.    

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
  Woodford Neil Woodford
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
  Robeco Team based

 

Brewin said a 'carefully orchestrated' plan will see around 60% of MPS assets, which stood at £2.3 billion at the start of the year, will be transferred to the new structure. 

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.

 

 

 

 

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