Legal and General Investment Management (LGIM) is the latest asset manager vowing to “disrupt the market” by launching a low-cost model portfolio service (MPS).
The range will encompass growth and income MPs with varying risk profiles and will be led by Justin Onuekwusi, head of retail multi asset funds at LGIM.
He will draw on the expertise of LGIM’s 30+ asset allocation team, headed up by Emiel van den Heiligenberg, which oversees £63bn in multi-asset funds, as well as the solutions team which looks after £200bn ($283bn, €232bn) of institutional portfolios.
Annual management charges (AMC) have been set at 6bps (5bps + VAT) in what LGIM described as a “highly competitive” move in response to client demand.
James Crossley, head of UK sales at LGIM, said: “The launch of our MPS is a direct reflection of the demand we are seeing from advisers for competitively priced and flexible model portfolio solutions.
“Our scale as one of the largest asset managers in the world means that we can provide this robust investment proposition at a competitive price. We think this can disrupt the market whilst also applying our deep investment expertise, across different strategies, to ensure that our model portfolios offer attractive returns for clients in line with their investment goals.”
LGIM undercuts Schroders MPS charges
Responding to the news, Clive Waller, managing director of CWC Research, said that “competition is great and the more competition on price, the better”.
LGIM is the latest asset manager to launch an MPS suite sensing an opportunity to tempt advisers away from DFMs.
Schroders unveiled its own low-cost model portfolios as part of its £4bn Investment Solutions business in April 2021. Its range, which spans active, index and sustainable model portfolios, has an AMC of 15bps excluding VAT, more than twice as high as LGIM’s current pricing.
While LGIM did not provide a breakdown of total charges for its MPS range, a spokesperson said a typical active growth portfolio would be priced at 0.32%, including the AMC and OCF, while a passive equivalent would have a blended total fee of 0.25%.
Ongoing charges figures on Schroders’ MPS range from 0.57% and 1% for its Active portfolios and 0.25% and 0.28% on its Strategic Index portfolios.
Focus on passive and ESG
LGIM’s MPS range, available to investors via their financial adviser, includes 21 growth-focused model portfolios in three different investment styles.
These include index-focused model portfolios, which draw upon LGIM’s suite of passive vehicles and offer exposure to a range of ETFs; ESG-focused model portfolios invested in ESG-focused funds such as LGIM’s Future World fund range; and a blended MPS, investing in active funds managed by LGIM and third-party managers.
LGIM will also offer four income-focused model portfolios, holding a balance of underlying funds to deliver income, whilst maintaining the potential for capital growth.
Each of the model portfolios correspond to a stated investment target and corresponding risk profile, employing a diversified asset allocation approach that aims to maximise outcomes within the stated risk parameters.
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