Seven Investment Management (7IM) is launching three co-branded, passive, riskprofiled UCITS funds with Distribution Technology’s financial planning tool Dynamic Planner.
They are called 7IM Dynamic Planner Portfolio four, 7IM Dynamic Planner Portfolio five and 7IM Dynamic Planner Portfolio six.
The funds will sit as part of the Dynamic Planner risk targeted managed range, using their asset allocation to the Dynamic Planner risk profiles.
They will be managed by 7IM’s fund management team, overseen by Chris Darbyshire, chief investment officer at 7IM.
The funds will follow the asset allocation provided by Distribution Technology, through exposure to a range of asset classes that may include equities, government and corporate bonds, index linked gilts, cash and near cash, real estate and certificates of deposit, via exposure to futures and to funds.
7IM claims the launch would offer advisers and their clients the combined expertise of 7IM and Distribution Technology, at low cost, using rigorous risk management to the Dynamic Planner risk profiles.
Chris Fleming, director of asset and risk modelling at Dynamic Planner, said the move had come as the company had been getting ever-more demand from advisers for funds that were risk targeted.
The initial offer period for the purchase of shares in the 7IM Dynamic Planner Portfolio 4, 7IM Dynamic Planner Portfolio 5 and 7IM Dynamic Planner Portfolio 6 runs from 9.00am on Monday 18 September 2017 to 12:00pm on Friday 6 October 2017.
All shares purchased during the initial offer period will be purchased at the initial offer price of £1 per share.
Provider view:
Tom Sheridan, chief executive officer at 7IM, said: “Distribution Technology is a good fit with us, with a risk management approach that complements our own, and with a tried and tested asset allocation model, advice technology process and fund research that has earned them an enviable following.
“The co-branding of the funds reflects close involvement in the manufacture and overseeing of the funds, with Chris Fleming on the investment committee for the portfolios. We look forward to our continued close relationship, which all builds on the existing alliance between our firms.”
Adviser view:
Alan Steel, chairman at Alan Steel Asset Management, said: “I wonder how you can have passive and smart passive portfolios that are managed? I’m also suspicious when we’re told that a such and such product is being launched in response to adviser or client demand. I have seen that many times over the years and not many worked terribly well.
“Maybe these risk managed portfolios were backtested before launch/design. Research from the US shows that recent obsession with cheap smart beta worked in backtests, but not in real life after launch. Cheap is the buzz word of the present, as if it’s a guarantee of performance. But history isn’t kind to the concept.
“Finally, I’d be hesitant before rushing any investment the herd is demanding; bitter experience has taught me that. It makes marketing and selling easier, but herds usually end up in the slaughterhouse.”
Charges:
Ongoing fund charge of 0.29 per cent.
Verdict:
Only time will tell if building a product like this based on client demand or cost is the right methodology to choose.
