Ascot Lloyd investment director Steven Lloyd explains how a centralised investment proposition and bespoke discretionary fund management caters for individual client needs.
Can you explain your investment approach?
We use a combination of in-house and outsourced solutions, depending on the individual client.
We have a centralised investment proposition that provides a range of choices for each client dependent on their needs, and a bespoke discretionary fund management offering which is outsourced to three panelled providers – namely, Brooks Macdonald, Quilter Cheviot and Tilney.
We use DFM Ethical Model Portfolios and a DFM Guardian Model Portfolio, both provided and managed by Parmenion Investment Management. The latter is a solution that has been built and tested specifically for the stresses of decumulation.
We also offer a platform-based DFM model portfolio service through Avellemy, a sister company to Ascot Lloyd, that has its own FCA and company numbers. It offers three sets of strategic model portfolios: active, passive and income. Parmenion provides the fund analysis using its quantitative and qualitative process that goes back to its inception in 2008. Myself and Tony Yousefian are the CF30 approved investment managers at Avellemy, ultimately responsible for the investment decisions taken.
Finally, we offer a range of risk-target/profiled, multi-asset/multi-manager funds and have a panel of higher-risk investment solutions such as venture capital trusts and enterprise investment schemes. As we are independent, if none of the above options work for a particular client, we will work with our advisers to find an alternative investment solution.
How are funds selected and reviewed in your model/bespoke portfolios?
Avellemy uses long-term strategic asset allocation. Parmenion then conducts thorough quantitative and qualitative analysis on all onshore and offshore domiciled open-ended funds within each of the asset classes.
Our investment philosophy concentrates heavily on downside protection and ensuring we have a blend of different styles within individual asset classes. The quantitative criteria leads the team to high-quality managers who have proved their ability to provide strong risk-adjusted returns through differing market environments.
The qualitative overlay is where the team meet the managers to ensure they fully understand the process and philosophy. The funds are reviewed officially on a monthly basis, but in reality it’s more regularly than that. All due diligence notes are updated at least annually, which requires an update meeting with the manager.
We have official review criteria: for example, if the fund falls behind peers over three years, the fund manager or team leave the company, the fund management company is taken over or we feel the manager takes on too many mandates. These do not amount to hard sales of funds, but the reasons for and the consequence of these events need to be fully understood to us and explainable to clients.
How do you select DFMs?
We selected the current panel after a market review that included a filtering stage to get the number of providers down to a manageable level by identifying key criteria, then spending time evaluating each one.
We then shortlisted the five preferred DFMs and held in-depth meetings with them all. It was important to identify a highly qualified and experienced team with a reputable track record that met our internal investment philosophy. We needed to be assured of the level of service that would be provided and all at a cost that is ultimately beneficial to our clients.
What platforms do you use?
The bespoke DFMs hold custody of the assets on their platforms. Ascot Lloyd’s panelled platform is AJ Bell and we use Defaqto’s panelling service. We give Defaqto our key criteria and it has a team that conducts the research on our behalf on a six-monthly basis. A report is produced and then reviewed via meetings with Defaqto and internally.
The Avellemy models are run on Aegon ARC, FFN, Parmenion and Zurich with shortlisting conducted via Defaqto, then a review is undertaken with each provider to ensure we can run the portfolios.
We are looking for consistency across the platforms so the client experience is similar whichever platform they use.
What are the benefits to clients and to the business of your investment management approach?
We firmly believe using a CIP and panelling providers leads to consistent advice and also allows us to pick the best providers, using the fact we panel to reduce the charges the providers apply to client investments.
As an independent firm we are also able to build individual solutions for clients who have complicated circumstances or needs. We are not forced to shoehorn clients into a solution that is not suitable for them from a risk perspective.
The main benefits of discretionary fund management to clients is efficiency of portfolio management and competitive costs. They can be assured their portfolio is continually being managed to the level of risk that they are willing and able to take.
Date established: 17 February, 2004
Assets under management: £6.5bn
Platforms used: 5
DFMs used: 5