Premier Asset Management says its fund management capability gives its discretionary fund management service some advantages over traditional DFM services
The private client portfolio service comprises 10 risk-graded portfolios, each with a minimum investment of £50,000. They invest entirely in a selection of seven Premier funds of funds, which comprise a portfolio of third-party funds to provide exposure to a range of asset clas- ses such as cash, corporate bonds, equities and structured products.
Premier says traditional DFMs are difficult to put on to platforms because most cannot handle different asset classes. There are exceptions, such as Transact, but Premier wanted IFAs to access its DFM through a broad range of platforms.
Unitising the 10 risk-graded portfolios so they hold different assets through funds of funds rather than holding the assets directly enables the portfolios to be held on platforms across various wrapper products such as Isas and Sipps.
The structure is tax-efficient, as it allows Premier to take fees only as a 1 per cent annual charge from each of its funds of funds rather than a DFM fee. VAT is charged on DFM fees but funds are exempt from this.
The fund of funds structure means selling a fund from the underlying portfolio will not trigger a capital gains tax liability. This is not the case where funds are sold from traditional DFMs.
Premier says clients of traditional DFM services normally need at least £250,000 to invest, but advisers are looking to outsource investment management for all clients.
Premier managing director of sales and marketing Simon Weldon says: “Only companies with fund management capability can structure a DFM service this way. It is particularly effective when platforms are used.”