Passive multi-manager Evercore Pan Asset Capital Management says people worry about exchange traded funds but they are “straightforward, safe and liquid”.
The firm, which has just added defensive and aggressive funds to its PanDynamic passive fund of funds range, says advisers have concerns because ETFs are not covered by the Financial Services Compensation Sch-eme. ETFs also provide indirect exposure to asset classes, which can be a concern to advisers who do not use ETFs.
Evercore Pan Asset believes a professionally managed fund of funds could help advisers benefit from the low-cost access to a broad range of asset classes available through ETFs. This includes listed private equity, property and commodities, not only the usual mix of equities and bonds.
The firm believes its risk-graded Pan-Dynamic funds differ from other passive multi-manager fund ranges by taking bigger positions and stronger views on asset classes. Its focus on concentrated portfolios that invest only in ETFs and index trackers differs from other passive multi-manager funds, which include those from 7IM and Architas.
Both the Architas multi-asset passive funds and 7IM’s asset allocated passive funds comprise mainly ETFs and tracker funds but contain other funds and assets if necessary. The 7IM range also contains more under-lying holdings than Evercore Pan Asset’s funds but the Architas portfolios are concentrated.
Looking at the income generated by an asset and how much that income is growing is central to Evercore Pan Asset’s portfolio construction.
The firm says some assets such as commodities pay no income but that highlights how speculative it is as an investment.
Chief executive Christopher Aldous says the firm wants to make a difference in driving down the costs of funds of funds using ETFs. He says: “The crucial thing about the PanDynamic funds is keeping the costs right down. Overall costs on a standard fund of funds are not just the reported costs because the total expense ratio does not include dealing and transaction costs.”