Another area to consider is how to add past performance of old share classes onto the new clean/super clean share classes.
And, finally, but perhaps most importantly, although new entrants are still arriving into the platform space, will there be the platform consolidation we have been waiting for?
Unitised discretionary
Unitised discretionary fund managers (UDFMs) are collective investment schemes run by discretionary managers and are usually the best expression of the ‘house’ investment style. The potential benefits of a UDFM approach include:
• Providing a proposition for lower-value clients
• Providing a proposition that is suited to platform administration
• Simplifying the tax management for clients
• Removing VAT from the annual management charge
• Allowing wider numbers of clients to access a discretionary manager or team
Historically, the majority of discretionary managers have stuck to the management of segregated portfolios. For various reasons - technical, administrative and commercial - some discretionary firms have ‘unitised’ their discretionary portfolios, making them available as funds.
There is a temptation for advisers to overlook these funds as there may be the perception that it is not the discretionary managers’ specialty. Understanding the reasons that discretionary firms may wish to unitise their discretionary portfolios should allay some of these misconceptions:
• Access to the same, or at least similar, investment management, philosophy and methodology is made available for as little as £1,000. Advisers subscribing to the investment philosophy and style of a particular discretionary manager do not want to undergo further due diligence for clients that simply do not have or do not want to commit the level of assets required for MPS or bespoke portfolio
• For many discretionary fund managers the appeal of unitising is the realisation that a larger volume of smaller investments, run efficiently through a fund structure, could contribute significantly to assets under management. Not surprisingly, some of the UDFM see themselves alongside their risk targeted multi-manager counterparts, given that the risk controls can be similar in approach and the same fund family structure exists
• The trend towards outsourcing investment decision making has coincided with the trend for outsourcing investment administration through platforms. Many of the platforms have made considerable strides in partnering with discretionary firms and offering the segregated portfolios. However, the legal arrangements can be complex and offering a unitised fund simplifies the arrangements
• Advisers may be happy with their choice of discretionary manager for the majority of their clients but there may be some clients for whom a segregated portfolio is not suitable, for tax reasons. Owning a fund rather than a segregated portfolio defers capital gains tax until units in the fund are sold
