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‘Managed portfolios do not suit all clients’

Multi-manager OPM says putting all clients into managed portfolios following the RDR will not work for IFAs because the approach does not suit everyone.

The firm is preparing a range of managed portfolios for 2011 and is awaiting regulatory approval on two new funds for the post-RDR market. OPM diversified target return will be an absolute return fund and OPM worldwide opportunities will be a global growth fund. Both funds will be available directly to advisers and within the managed portfolios, which will comprise solely of OPM’s funds of funds.

OPM has a range of nine paper risk-graded managed portfolios, which it plans to offer to IFAs on a discretionary and advisory basis. Under the discretionary option, IFAs allow OPM to change the weightings in the model portfolios in line with economic conditions but will retain control of their clients. OPM reports back to the adv-iser details of any portfolio changes and why they were made. OPM sees opportunities for this approach among IFAs who are capable of portfolio construction do not have time.

The advisory option differs in that OPM will advise the IFA of the portfolio changes it recommends but the IFA has the final say.

OPM chief investment officer Tony Yousefian says: “Advisers will have to be fees-driven and will need to construct portfolios for clients while taking care of ongoing management. The days of buying a balanced managed or cautious managed fund and leaving clients’ money there is limited because there is no justification for charging a fee if you use just one fund.

“The risk ranges on our model portfolio are diverse but we are not trying to shoehorn everyone into a portfolio, as this does not work in practice. Managed portfolios may suit the majority of clients but not all. If people want to buy the OPM funds as building blocks in portfolio construction, they still can.”


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