Multi-manager  

Santander duo enters retail market

Santander Asset Management is set to make its mark on the retail investment adviser market with the launch of a price-capped range of risk-targeted multi-manager portfolios, Investment Adviser can reveal.

The Atlas portfolio range will have a capped ongoing charge of 99 basis points, from which the company will take a 40 basis point annual management charge (AMC), with the balance covering other costs.

Multi-manager duo Tom Caddick and Toby Vaughan moved to Santander in January 2011 after leaving LV= Asset Management. Since joining, only a few of their funds have been made available to retail advisers and only on a small number of platforms.

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However the pair, who run ¤10bn (£8.3bn), said the Atlas range would be listed on eight major platforms, with more to follow. Furthermore, it would be firmly targeted at retail advisers and would not be available through the bank’s branches.

The five funds will have clearly defined risk targets that match Distribution Technology’s risk profiles (3 to 7) to suit varying investors.

Mr Caddick, who has also worked with Mr Vaughan on multi-manager funds at F&C Investments, said the funds would provide total transparency on charges, including details of the transaction costs of the underlying funds held within the Atlas portfolios.

Asked about the rationale behind the range, Mr Caddick said: “Risk-targeted funds are a growth area… and we think our range provides a great solution for advisers and their clients looking for a diversified, actively managed solution that provides helpful guidance via a targeted volatility range.”

Mr Vaughan added that Santander’s scale enabled it to lower the AMC on the funds and that cost was “an increasing issue for both advisers and end clients”.

Mr Caddick said the range would disclose costs in line with IMA guidelines but would also go a step further.

“We will, in addition, disclose the transaction costs for the underlying funds invested in by the funds of funds,” he said. “We will present these in simple charts, within our fees and charges brochure.”

The range already has £765m of Santander client money as at the end of September and Mr Caddick said little would change for those clients already invested.

The managers said it would also work with Barrie & Hibbert (B&H), part of Moody’s, to provide long-term projections for each portfolio.

“These projections are sometimes called ‘client outcomes’ because they show what outcomes a client could experience,” Mr Caddick said.

“[They] show what clients should get back on average, and the ‘higher’ and ‘lower’ returns. In addition we also show the probabilities of losing money and what a ‘bad’ year could look like, again all based on the independent B&H model.”

The range has already been given a 5 Diamond rating by Defaqto, which described the ratings as a way to “give advisers a solid framework around which they can both position and recommend managed funds”.

Do advisers back the price cap?