View the article online at http://citywire.co.uk/wealth-manager/article/a754587
Wealth managers hit back over claims of ‘murky’ costs
by Robert St George on Jun 04, 2014 at 08:09
Value, not price
Brewin Dolphin, Brooks Macdonald and London & Capital also all emphasised the importance of value rather than simply price.
‘We do not select funds based purely on cost and review each fund based on the rigorous due diligence process which is whole of market, best of breed and includes a full qualitative and quantitative analysis before it goes onto our buy list,’ remarked Brewin’s Johnson.
‘The share classes may differ between platforms but we will always seek to invest in the lowest cost version of the fund selected for our models.’
A spokesperson for Brooks Macdonald told Wealth Manager that the firm was ‘a performance-driven DFM which does not populate its portfolios with the objective of producing the lowest total cost of ownership – rather they invest to gain the best risk-adjusted returns for clients’.
Brooks Macdonald acknowledged that as such it did employ passive funds ‘where appropriate’, but only on the basis of ‘what is right for the client, not what is right for our sales proposition’.
London & Capital’s Leigh concurred that value was a greater concern than price.
‘We as a firm measure ourselves against risk-adjusted performance, so that our managed portfolios perform in all market conditions,’ he said.
‘We always aim for good performance but never aim for the best performance. It is important to take this into account and for investors not to focus on purely which managed portfolio range is the cheapest or ones that create the highest returns, as these yardsticks can be transitory.’
Leigh additionally rejected accusations that DFMs simply all populated their portfolios with the same funds rather than adding true value.
‘In terms of commonality among underlying fund selection, clearly performance influences third-party selection,’ he argued.
News sponsored by:
As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.
Today's top headlines
With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop