Over the past few months, a Swedish wealth manager has begun assembling troops across the UK, gathering seven adviser firms and launching its own platform - assisted by some private equity investment.
These pursuits have culminated in the release of the Söderberg & Partners MPS range, which came to market last week, as Asset Allocator dutifully reported.
Following the news, we sat down for a chat with founding partner Fredrik Börjesson about what lies beneath the bonnet of his models and how he’s differentiating his proposition from an increasingly crowded market.
“When we developed the proposition for the UK market, it coincided in time with consumer duty being rolled out by the FCA,” he said.
“We understood that was going to have implications for the industry and we thought we needed to adapt to those signals coming from the regulator, so we decided to use passive funds to a great extent to achieve cost efficiency. So wherever we can, we like to go for passive options where it makes sense and use a satellite framework to add more sophistication for clients.”
Alongside the core offering, then, is the option for clients to get involved with fruitier products (such as alts, which are excluded from the basic range), and leverage some tactical allocation in the equity space, the direction of which is guided by Soderberg’s research team.
“Our current view on regions is that we are overweight North America and that's linked to our main scenario, the soft landing,” said Börjesson.
“We think interest rate cuts will be beneficial for equities and perhaps in particular growth-oriented stocks. So we're quite happy with that exposure we have right now to the North American region. In contrast to that, we are underweight Europe."
As a Swedish company, Söderberg offers something of an outsider's perspective on the UK DFM market which is largely populated by British companies.
And indeed Börjesson said he is not incorporating a home bias to the UK, which breaks with a long-held tendency of DFMs to favour the domestic landscape.
He said: "We're also seeing that satellites can be used, perhaps to particular geographic regions. So we're not having a home bias to the UK markets in the core portfolios, they're well diversified on a global basis geographically.
"But we're thinking that if someone wants a home bias, increased UK exposure can be added on through through a satellite."
Sustaining sustainable
The decision to launch a sustainable MPS at a time where ESG offerings are relatively out of favour is a long-term view that Börjesson thinks will capture the next generation of younger clients who have grown up in a world of increased concern for the climate.
“If you grow up with this and are constantly hearing alarm bells ringing – you're reading about the polar caps melting or glaciers retreating and and so on and so forth – I think the younger generation probably has a different view on these things,” he said. “And if you can use your savings, your investments, to make a difference, then I think many people would like to do that.”
On the fees side, charges begin at 0.07 per cent OCF for the adventurous core portfolio, going up to 0.65 per cent OCF for the adventurous active core, alongside a DFM fee of 20 basis points.
Börjesson sees the combination of passive trackers complemented by tactical allocation as “quite a powerful combination” in the increasingly crowded MPS space.
On the spectrum of asset allocators, Söderberg looks to sit around the passive-preferring providers such as LGIM, which charges an impressive 6bps DFM fee.
Indeed, this strategy of passive-with-an-active-twist could be the way the fund selection world is going, with the bods over at NextWealth calculating that DFMs who charge less are growing assets more rapidly than their pricier counterparts.
We’ll keep you posted should that day come.
