Product review: Thomas Miller DFM model portfolios

Drawing on its 128-year group history, Thomas Miller Investment is seeking to take a step into the modern day with its discretionary fund management (DFM) model portfolios.

The company is targeting financial advisers with its new range, hoping to draw the interest of those seeking an “efficient discretionary fund management service to a wider range of clients”. It said the portfolios have been launched in response to increased adviser demand for competitively prices, transparent solutions.

Six portfolios will be available, including fixed interest, equity and four multi-asset options. Each has been risk-profiled using FinaMetrica software to assist advisers in matching portfolios to their clients.

The service will be available to investors with more than £50,000 and carry an annual management charge of 0.4 per cent per annum.

According to Thomas Miller, the total expense ratios associated with the investments should be lower than comparable services – particularly those operating a fund-of-funds approach – due to its long-term investment approach and security selection process. Its strategy will include direct investment into bonds and equities where appropriate, in addition both active and passive funds.

Portfolios will invest in the same securities as the firm’s largest institutional clients. Thomas Miller Investments currently manages assets in excess of £2.6bn for a clients such as insurance mutuals, pension schemes and private clients.

MM view

It seems that model portfolio solutions are popping up all over the place. It is little surprise that DFMs are looking to get into this space, but, with the marketplace becoming ever more crowded, it is becoming even more important to do something that stands out.

The Thomas Miller portfolios are relatively low cost, although, with plans to invest directly into equities and shares along with funds, its total expense ratio will be the true test. Its minimum investment is higher than some DFMs that have developed similar solutions, but it is low enough to allow access to clients who would not need a full discretionary solution. The full Thomas Miller DFM service is only available to those with assets exceeding £250,000, for example.

Its range is about typical for this space; with six different options, the approach is relatively broad. It also picks up on the multi-asset trends doing the rounds, although offers some more vanilla fixed-interest and pure equity options for those with preferences here.

A company that has been around for a long time gives advisers the option of checking its track record, in contrast to some of the newer entrants. The fact that the portfolios have been risk-rated is an additional comfort, although raises the ongoing issue of risk-rated versus risk-targeted portfolios.