HSBC Global Asset Management (HSBC GAM) has unveiled a global managed portfolio service (GMPS) targeting cost efficiency and transparency by using its own range of passive products in the underlying holdings.
The group has partnered with Aviva for the launch, with the GMPS exclusively available through Aviva's platform for nine months, following which HSBC GAM will review further platforms for roll-out of the service.
However, Smera Ashraf, head of business development, CEO office at HSBC GAM, said there are no plans to go mass market and the firm will continue to team up with platforms selectively.
Despite Aviva's woes in the platform space this year following replatforming issues and outflows, Ashraf said the group was "a good fit" with the platform growing in the discretionary market.
The new proposition, which has been researched for 18 months and run internally for three months, has been launched in response to changing regulatory requirements and in recognition of the need for transparency.
Ashraf said the findings showed MPS are complicated in terms of fees for the end client, while the ongoing charges figure (OCF) "varies widely".
"At HSBC GAM this is something we can bring value to," Ashraf said. "We are fully transparent. We want to fully disclose fees for our MPS.
"We have the highest assets under management (AUM) on platforms and we have been discretionary since 1986.
"A lot of proprietary tools have gone into building the models. It is a retail poduct where the client can benefit from the same resources as an institutional client."
The GMPS will comprise five actively-managed multi-asset portfolios (see table) that will mainly hold HSBC GAM's passive funds, unless there is not a suitable product internally or in the passive space, in which case external mandates and/or active strategies may be selected.
Run by Wayne Nutland, who sits on the multi-asset team, the range will have a similar ‘engine' to HSBC's £500m risk-targeted Global Strategy Portfolios, led by head of UK multi-asset Ashley Reid, HSBC GAM chief executive officer Andy Clark said.
"Where we can we will use internal funds as they are cheaper, but we have the scale and buying power to negotiate," Clark explained. "We are bringing institutional rigour to the retail market. We are not going into the MPS market and copying it - we were petrified at the thought of a me-too product. But it is not that."
Clark added the launch is "the first step into the market" and added they have some other "great ideas", such as an active version.
"This is the first step on a journey of a lot more products and a lot more choice. But our ethos will remain; it is about cost-efficient solutions. We are not about getting into a fight to be the cheapest."
While the underlying holdings in the MPS will be traditional passive funds, Ashraf has not ruled out the use of smart-beta in the future, although she said there is currently no demand from advisers.
"We have smart-beta products but when we asked advisers what they were looking for they unanimously said they want simple, straightforward portfolios," she explained. "We want to play to our strengths so if there is interest from IFAs we would definitely build them."
Clark added: "There are not many companies that could do the same thing. The mindset of the IFA industry has changed and will continue to change. More are looking at MPS solutions.
"We are keen to build relationships with advisers, so 100 accounts with IFAs over the next six months would be awesome."
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