Axa Wealth has launched a range of risk-profiled passive portfolios for clients seeking cost-effective investment stability in times of market volatility.
The Axa Wealth Elite Diversified Market Range, managed by Architas investment professionals, is built from a portfolio of passive funds that track a variety of market indices.
These off-the-shelf passive portfolios allow advisers and investors to select from five risk bands and come with a typical annual charge of 0.5 per cent.
Each fund has a different asset allocation based on its risk profile and is available through Axa Wealth’s retirement wealth accounts, investment bond and trustee investment plan.
According to Axa Wealth, the post-RDR climate has boosted demand for safer and cheaper investment options.
The investment and pension provider also points out the strength of Architas’ investment expertise, the importance of having access to a diverse range of underlying assets, the lack of reliance on single market index performance, and the lower overall charges of passive funds.
Nick Elphick, managing director at Axa Wealth Specialist Products, said the range was partly influenced by the department of work and pensions’ call for more low-cost investment solutions for pensions.
With annuity rates low and life expectancy increasing, Mr Elphick said these types of passive risk-profiled vehicles offer an effective alternative to help build the foundations for a decent income at retirement.
He said the low-cost option, coupled with risk-profiling tools, offer the perfect solution to suit time-pressed advisers and those wanting steady returns in an uncertain economic environment.
Nick Elphick, managing director, Axa Wealth Specialist Products, said: “Our new range of passive funds, which sit within five different risk profile bands, offers advisers and their clients a lower-cost, long-term investment strategy.
“Greater asset diversity is also important. Put simply, the diversification of the underlying assets means clients are not putting all of their eggs in one basket. This diversification may help to reduce the combined risk of the overall portfolio and limit the reliance on the performance coming from any one part.
“The reality today is that people are living longer, annuity rates have fallen and the state is going to be less able to support people in their retirement. The combination of these factors has meant that pension provision has become a key area of focus for the government, product providers and consumers.”
Gordon Bowden, director of Buckinghamshire-based Quainton Hills Financial Planning, said: “In terms of helping advisers with risk profiling, I think it is dangerous because the buck stops with the adviser and he takes the blame should things go wrong.
“I prefer not to use this approach, but to ensure I am happy with the risk profile that I design. Also, the 0.5 per cent charge sounds expensive for a passive strategy when compared, for example, with the fees charged by Vanguard’s passive life strategies. However, if they are run in a similar fashion to Winterthur Elite managed funds then they may not be too bad. I used them a while ago and they were pretty good.”