It’s not that easy. Among the many asset managers that have launched discretionary MPS, few have successfully gathered large swathes of assets. But if you are going after the GIA/unwrapped assets, the case is compelling for consistency across wrapper. MPS can also be hard to use in the off-shore bond and many advisers want consistency.
Separately managed accounts
The US and Australian markets are dominated by separately managed accounts (SMAs). Asset managers sell their expertise through financial advisers to create portfolios with direct equity holdings for clients. With growing tax liabilities, particularly for wealthier clients, these products could become more appealing to UK investors and their financial advisers.
Perhaps multi-asset fund managers should skip the step of developing MPS and fast-forward to developing SMAs for the UK market. SMAs could help financial advisers support higher net worth clients, helping them to compete with private banks.
Performance still matters
Perhaps, the most heartening message from our report is that performance still matters. It can feel like price is the only variable influencing flow. Our research suggests that hybrid and active solutions with a strong track record of benchmark-beating performance, are preferable to less expensive tracker funds.
I won’t wade into the debate about whether active can outperform in the long-term. But if I were working in an asset management firm offering active or hybrid solutions, I’d be encouraged by these research findings.
So, do multi-asset funds pose a threat to MPS? Yes, but at the margins. Having recently researched the MPS market in detail too (see our latest MPS Proposition Comparison Report), we think the direction of travel remains toward discretionary MPS. Time will tell.
