Before its acquisition by Schroders last year, Cazenove had been close to using the multi-manager funds to service clients who did not have the £200,000 minimum needed to access bespoke portfolios.
The acquisition meant the proposal was temporarily shelved, but Nick Georgiadis, head of the intermediaries team at Cazenove, said the firm would consider implementing the plan when the tie-up was completed.
Mr Georgiadis said Cazenove had thought “long and hard” about launching model portfolios, which many discretionary managers have done to service clients with less money.
But he added Cazenove had rejected the idea and was instead “fairly close to formally incorporating” the Diversity fund-of-funds range as its solution for advisers looking to outsource to clients.
He said the firm could still “unofficially” use the fund range at the moment, by pointing advisers with smaller clients towards it, but was looking into something more formal.
Although the acquisition by Schroders was formally completed in July 2013, Cazenove is still in the process of transferring all of its clients onto Schroders’ operating platform and hopes to have it completed by the end of July.
When all clients have been transferred across, Mr Georgiadis said the Cazenove platform would be scrapped.
However, due to the better brand awareness of Cazenove in the wealth management industry, the firm will retain the Cazenove name, with Schroders private banking division also being brought under the Cazenove brand.
Mr Georgiadis said Cazenove had continued to see interest from advisers in outsourcing clients to them during the takeover process and said the respect in which Schroders is held by advisers had improved Cazenove’s ability to attract advised business.
The adviser-facing side of the Cazenove business has been the “most consistent growth area” for the firm, according to Mr Georgiadis, and now handles £1.5bn on behalf of advisers’ clients.
But he said the acquisition by Schroders would help the business expand further, due to Schroders’ “much deeper pockets”.
Mr Georgiadis said he was in the process of hiring two new portfolio managers, due to the influx of money into the firm and the need to “make sure we keep the right number of qualified managers” to service all clients.
But he said there were currently no plans to expand Cazenove’s regional presence with new offices around the country. Unlike many of its discretionary rivals, Cazenove has a limited number of offices around the country for its adviser-facing business.
Mr Georgiadis admitted that he sometimes felt like Cazenove may “miss out by not having feet on the ground [around the country]” but added that many advisers preferred not having the discretionary manager near the client due to concerns the client may be stolen by the DFM.
Delving deeper into the Diversity range
Schroders
MM Diversity
This flagship fund has been positioned as a core holding within portfolios and can even be used as a sole holding for a smaller portfolio.
It has undergone a resurgence in the past few years, having underperformed during the recovery period after the end of the financial crisis.
It is in the top quartile of the IMA 20-60% Shares sector for performance in the past three years, but is still in the third quartile when looking at five-year data.
Schroders MM Diversity Balanced
A slightly higher-risk version of the original Diversity fund, the Balanced fund actually has even more of its assets currently held as cash at nearly 40 per cent, reflecting the cautious view of its managers.
Compared to a global index, the fund has a hugely underweight position to US equities, which make up just 6.8 per cent of the fund, and an overweight position in UK equities, at 20.2 per cent.
Schroders MM Diversity Tactical
The most flexible of the funds in terms of risk, the Tactical fund actually has the most cash in the range, at 41 per cent.
It has bought M&G Recovery and the L&G pharmaceutical tracker, but sold its holding in Hugh Hendry’s Eclectica fund following huge underperformance.
Across their fund range, Marcus Brookes (below) and Robin McDonald have switched from funds that focus on early-cycle stocks to ones that invest in late-cycle stocks.
