VanguardAug 5 2021

Vanguard plans model and bespoke portfolio push

Search supported by
Vanguard plans model and bespoke portfolio push
Piotr Swat/

Vanguard is planning a push into the UK model and bespoke portfolio space, aided by the first acquisition in the company's 46-year history.

Last month the company acquired Just Invest, a US start-up that builds bespoke portfolios for individual investors - a "direct indexing" approach that some see as the future of fund and wealth management.

Speaking to FTAdviser, Vanguard UK distribution head Neil Cowell said the company was looking at incorporate Just Invest's technology in its offerings to UK advisers. But he added the company's initial focus would be to expand its model portfolio services.

He said: "We have seen in the LifeStrategy funds, over the last 10 years, the power of Vanguard’s investment strategy group. 

"Next in line we will start to develop model portfolios that will look at different flavours."

Earlier this year the company made its first UK foray into model portfolio provision via the launch of 'LifeTarget' models, aimed at retirement planners.

Cowell added: "We see models uptake growing steadily - the use by advisers of model portfolios is growing. We are still seeing that a healthy number have their own in-house models."

Discussing the type of model portfolios that may come next, Cowell said it "wouldn't be surprising" to see the company offer model portfolios blending active and passive funds, or volatility-managed portfolios. 

He said the acquisition of Just Invest - Vanguard's first deal since it was founded in 1975 - could give the company the ability to offer bespoke services to its UK adviser client base.

"That next evolution may well see us give advisers the ability to bespoke their own."

Direct indexing allows investors to adjust existing indices to incorporate tilts to particular investment factors, such as value or growth, or to match their ESG beliefs.

As well as services for intermediaries, Vanguard moved into the UK advice space itself earlier this year. The company launched its restricted advice proposition, charging just 0.79 per cent "all in", in April, though it has confined itself to investment advice rather than financial planning for now.

Cowell said he had encountered almost no negativity from advisers as a result of the move.

He said: "We communicated very openly and explicitly. There has been next to no reaction or noise to it. Openness has been key. We are simply seeking to bring advice to more people.

"As long as we continue with pace to demonstrate our support for advice and advisers, my experience is that the majority of advisers understand our intentions are honourable."