Product review: JP Morgan risk-graded portfolios

RDR-friendly funds have been unveiled by JP Morgan Asset Management in a bid to profit from the multitude of client investment assets currently being outsourced by financial advisers.

These risk-graded portfolios will arrive in early 2013 and include five multi-manager funds called Fusion and six model portfolio vehicles titled Elite. The former is available to advisers and direct clients, while the latter has been created for advisers and includes the option to ‘white label’ documents with your own corporate identity.

The Elite range consists of income, conservative, balance, higher income, growth and growth plus strategies, while the Fusion products, which will also be available on major third-party platforms, offer the same options, with the exception of the higher income fund.

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Both product ranges will be actively managed, ‘whole-of-market’ propositions and guided by JP Morgan’s asset management and private banking divisions.

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Model portfolio funds have garnered plenty of controversy in recent years with numerous advisers accused of pushing clients into unsuitable portfolios to capitalise from ongoing commission.

However, model portfolios, when employed to reflect a client’s needs, are a popular, cheap and effective method to gain decent exposure to the investment market. While there is not a standardised method to compare rival competitors in the field, they generally offer decent middle-ground between multi-manager funds and bespoke portfolios.

Multi-manager funds are also popular with busy financial advisers who, given time constraints, are not always able to make investment decisions for clients.

Investing your money in a fund composed of several managers with varied expertise sounds good in theory, yet inflated costs often accompany this luxury. It is therefore important to ensure that returns compensate fees and to consider whether it is possible to generate the same income under the guidance of just one manager.