Platform provider Parmenion has launched a “low risk” DFM portfolio of money market funds called Sterling Solution in response to “adviser demand”.
The company says that since pension freedoms, advisers have had “increasing responsibility” for helping clients manage their income in retirement.
It highlights that the need for short term, liquid assets to accommodate clients who want to spend money when they stop work, or have a cautious approach to risk, continues to grow.
Parmenion Investment Management says the solution it has created will appeal to clients who are looking to further diversify their portfolio by investing in a low risk solution that still has the potential for some “nominal returns”.
The portfolio of short term money market funds can be held in all Parmenion wrappers including Sipp.
It says underlying exposure is to money market deposits and securities with average maturity of less than 60 days.
The solution’s initial yield will be 0.78 per cent before charges (as at 01/08/2019) and 0.46 per cent after OCF, Parmenion DFM and custody charges.
The custody charge will be set at a rate of 0.20 per cent, and a DFM fee of 0.05 per cent+ VAT to support a competitive return for investors, according to the company.
Parmenion’s chief marketing officer Sarah Lyons says: “Our new Sterling Solution greatly enhances our overall proposition. It offers, at low risk, a competitive level of income, consistent with institutional money market operations. Now we have a new option for clients with a need for liquidity in their financial plans.”
The new portfolio sits alongside Parmenion’s existing range of solutions which include fully active, passive, blended, ethical, retirement and income options.
Parmenion Investment Management managing director Peter Dalgliesh adds: “The complexity of the money markets should not be underestimated. Fund selection due diligence of money market funds has to be carried out very thoroughly in order to understand what level of risk you are exposed to, especially when higher yields are being offered.”
PIM Sterling Solution will be available to advisers on the Parmenion platform only and will not be available on other platforms.
Parmenion is part of Aberdeen Standard Investments, the asset management business of Standard Life Aberdeen.