Investments 

Pension allowance and property funds: week in news

Pension allowance and property funds: week in news

Ahead of the half term school holidays, here is everything you need to know about what has been going on in the world of financial services this week?

1) Treasury knows price of nothing

The government decided savers should take £1,500 from their pensions (in three annual instalments) to pay for advice.

The problem is advisers appear sceptical of whether they would be able to offer their services – or a service of any meaning – to someone for just £500 a year.

Meanwhile not a single provider contacted by FTAdviser said they would be easily able to facilitate savers dipping into their pensions to pay for advice from pension products created before the Retail Distribution Review by April, without including caveats.

2) Hot property

Remember that horse that bolted a few months ago? The Financial Conduct Authority has now decided to close the stable door.

Asset managers running property funds could be forced to separate retail investors' money from that invested by the likes of discretionary fund managers (DFMs), according to one approach floated by the FCA as a way to tackle liquidity mismatch issues.

In a discussion paper on illiquid assets and open-ended investment funds - prompted by the raft of property funds that suspended redemptions in the aftermath of last summer's European Union referendum - the regulator warned professional and institutional investors may hold a "significant or even predominant" portion of a given portfolio, potentially disadvantaging retail investors.

3) Who let the dogs out?

Bestinvest has released its list of funds which are barking up the wrong tree and there was some good news.

The number of consistently underperforming products at fund houses has dropped markedly, according to the latest Spot the Dog report, which saw serial offender M&G “finally escape” its list of shame.

Assets held in ‘dog’ funds – those that underperformed a benchmark by 5 per cent or more over three years – fell from £18bn to £8.6bn, in part because of some major M&G offerings leaving the list.

In last summer’s report, five of M&G’s funds – including the Global Dividend, Recovery and Global Basics offerings – represented £11.9bn of assets.

4) David vs Goliath

BlackRock, Fidelity and State Street eat your heart out: a financial adviser's passive strategy has outperformed many of the big active managers over the past five years.

Director at Provisio Financial Planners, Andrew Whiteley, who has been an adviser for 25 years, said he had been “left cold” with the end result for clients when he had used discretionary fund services in the past.

In 2008 he decided to revamp his company’s investment proposition by buying asset classes through index-tracking funds.

Figures from FE Analytics indicate the five baskets of passives - from defensive to aggressive - that have been put together by the Provisio boss, based on his research, have returned between 42 per cent and 48 per cent over five years.

This is almost twice as much as the averages across the FE UK Risk Targeted Multi Asset portfolios risk bands one, two and three.

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