Investments  

BMO’s rival to Vanguard gets £20m inflows a month

BMO’s rival to Vanguard gets £20m inflows a month

BMO Asset Management's 'low cost active funds', which were launched as an alternative to the Vanguard passive range, are attracting inflows of £20m a month less than two years since launch. 

The Universal range of three funds are managed actively by Paul Niven, who runs a range of multi-asset funds at BMO, including the F&C investment trust.

The funds were launched in November 2017 and now have assets of £300m.

Mr Niven allocates the capital in the Universal products to other fund managers within BMO, but charges the end client just one fee, which is 0.29 per cent.

The individual funds are Cautious, Balanced and Growth with each of the funds being among the top 10 per cent in the IA Volatility Managed Sector over the past year.

Rob Thorpe, head of distribution at BMO, said: “A message we have been getting from advisers for years is that they are under cost pressure, Mifid has done that, but so have other factors.

"And they told us for that reason, although they actually believe in active fund management, cost meant they had about 20 per cent of their client book, the most cost sensitive part, in products such as Vanguard, in passive products, which do a great job.

"But we thought there must be a way for us to address this part of the market, the most cost sensitive part, with an active fund.

"We spent a lot of time speaking to advisers about it before we launched. We have the scale as a business to run these, and believe they will get much bigger in future, as we think the cost pressures are not going to go away.

"Advisers tell us the first consideration when choosing an investment product is suitability and the second is cost."

BMO’s view is that clients with smaller pots of assets may subsequently become clients of BMO’s other investment funds.

FTAdviser understands the intention of the fund house is to expand the number of funds in the Universal range over the coming year. 

david.thorpe@ft.com