10 second summary
- A large UK wealth manager (£80bn+ AUM) wanted to design a fund that delivered regular income to fulfil its customers’ needs following the introduction of Freedom & Choice Legislation.
- We worked with the client to set a clear set of objectives for the fund based both on client needs and gap analysis of the existing fund range.
- We designed a fund that brings institutional-style investments to retail savers, achieving our client’s investors objectives without exposing them to unnecessary risks. As well as identifying the best-in-class managers in each asset class.
What was the problem?
- A large UK wealth manager wanted to design a fund that delivered regular income to fulfil its customers’ needs following the introduction of Freedom & Choice Legislation.
- With fewer people now buying an annuity to take them through retirement, we worked with the client to define how it would approach building a new product that would generate sufficient income for its clients to live on whilst maintaining a focus on keeping their capital stable.
- Given the heavy presence of equity funds in the retail investor landscape, the client wanted to explore a fund that could achieve this objective using fixed income assets, without exposing investors to the significant interest rate risk typically associated with corporate bonds.
What was our solution?
- We worked with the client to set a clear set of objectives for the fund based both on client needs and gap analysis of the existing fund range.
- We then designed a fund that met their objectives and filled the asset class and commercial ‘gaps’ identified, which required looking further than the asset classes most often offered to UK retail savers (benchmark-focused equity and investment grade corporate bonds).
- The funds we designed brought asset class strategies normally only accessible to larger individual investors within the reach of retail savers. These included high yield emerging market corporate bonds, European subordinated financial bonds, and bonds issued by US mid-market corporations.
- We used our proprietary risk processes – refined through our historic relationships with some of the largest institutional investors in the UK – to make sure that the blend of asset classes we wanted to use in the fund would achieve our objectives without exposing our client’s individual investors to unnecessary risks.
- We also undertook specialised and highly technical manager research: both to find best-in-class managers in each asset class, and to ensure that their investment strategies could be translated into the demands of the fund’s legal structure without losing each manager’s competitive edge.
What was the outcome?
- The resulting solution was well-aligned to the needs of UK retail savers and has performed well since inception. From a commercial perspective, the fund has also proven very popular with the client’s end investors.
What does this mean for you?
- We can help you design innovative portfolios that help you achieve your clients’ objectives without exposing them to unnecessary risks.
Want to know more?
If you would like further information, please contact:
CIO-Global Assets
I am Chief Investment Officer for Global Assets. In this role, I advise a range of wealth managers, insurance companies and public sector pension schemes with combined assets of more than £400bn
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