By Hannah Smith OBSR and Australian firm Praemium have joined forces to offer a risk-graded fund of ...
By Hannah Smith OBSR and Australian firm Praemium have joined forces to offer a risk-graded fund of funds range within the latter’s separately managed account structure.
The five-strong range will comprise funds designed to match varying risk profiles – defensive, cautious, balanced, growth and aggressive growth.
Praemium will act as the technology provider, while OBSR will provide a tactical overlay by selecting the underlying funds for each portfolio.
Barrie & Hibbert will be responsible for creating the asset allocation strategy.
SMAs are used widely in the US and this will be their retail debut in the UK.
They are designed to offer a personalised portfolio within a tax-efficient structure.
Praemium managing director John Martin said: “Each fund has separately managed account (SMA) technology inside it but is also an authorised UK unit trust.
“The funds tell clients their tax position, including any unrealised gains. In effect these are funds that come with their own reporting platform.”
The range aims to improve the advisory and compliance process by using tools to map a clients’ risk profile.
“If an IFA is using a risk profiling tool, we map that against the asset allocation model of the five sub-funds, from defensive through to aggressive growth, with each model supplied by OBSR,” added Martin.
OBSR’s director of investment service Peter Toogood said the group will use standard risk modelling to construct the portfolios.
Growth will have a greater proportion in equities and cautious more fixed income and cash, for example.
“A fund would be swapped out instantaneously if the manager left and replaced with a fund from our population or reserve list,” added Toogood.
Martin also believes the funds will be cheaper because they allow clients to agree remuneration with their IFA. This is then paid out at the fund level, so in effect investors have their own AMC.
The funds will soon be available via several fund supermarkets and wrap platforms, or direct from Praemium from this week.
Minimum investment is £3,000.
