Our Investment Fund Services
The benefits of unitising your client portfolios
We can provide you with all the support, guidance and oversight you need to unitise your client portfolios, through our authorised corporate director (ACD) business, Investment Fund Services. The Fund Services team can assist with every stage in the process of designing, launching and successfully operating funds.
Benefits of unitisation
Unitised portfolios can offer considerable benefits for your clients. The investment managers will have access to a wider range of investment opportunities, unitisation provides tax advantages for client portfolios not held in an ISA or SIPP and the economies of scale offered can translate into lower transaction costs.
Unitised portfolios can also offer advantages for your business, with a reduced administrative burden and increased trading efficiency. In addition, the commercial value of your business is likely to be substantially increased. The valuations of firms with unitised portfolios have the potential to be considerably higher and this is partly because of the reliable income they receive from annual management fees.
Consumer Duty
We believe the benefits described above for clients can help advisers meet the increased regulatory responsibilities heralded by the FCA’s Consumer Duty, which requires them to demonstrate products meet their clients’ needs and represent value for money.
Economies of scale
Because many investors have units in the same unitised structure, this creates economies of scale which can reduce costs for clients as well as the adviser business.
Increased trading efficiency
In unitised portfolios, when an underlying holding is bought or sold, the transaction is a single trade at one price for all investors. This means returns should be consistent over any given time period for all investors.
Transparency
Unitised portfolios carry a regulatory requirement to publish a standardised set of documents providing information for investors and potential investors. The consistent nature of these documents makes comparisons with other products more straightforward.
Uniform client performance
Investors in a unitised portfolio all hold the same assets, and in the same proportion, so performance will be uniform. This helps with delivering consistent outcomes, reducing queries and increasing transparency.
Reduced out-of-market risk
When some MPS portfolios are rebalanced, the client can be ‘out of the market’ for two to three days, which could mean they miss out on significant gains. With unitised portfolios, there is no delay between the sell and the buy, which reduces this out-of market risk.
Dynamic management
While some MPS portfolios will only be rebalanced at fixed intervals – for example, monthly or quarterly – the investment managers of unitised portfolios can be more dynamic, enabling them to act swiftly as market conditions change.
High standards of governance
Unitised portfolios use an Open-Ended Investment Company (OEIC) structure. Under FCA regulations, OEICs must have an Authorised Corporate Director (ACD). The ACD acts as a steward overseeing the running of the OEIC and helping to protect the best interests of investors.
Reduced administrative burden
The administrative work required to operate unitised portfolios can be significantly less than for individual client portfolios. This can free up considerable staff time and also reduce costs for investors.
Wider distribution opportunities
Unitised portfolios can be more widely distributed and provide additional opportunities outside your existing distribution channel, such as investment solutions for those who cannot necessarily afford personal investment advice but would benefit from your investment proposition.
Increased commercial value
Adviser firms operating unitised portfolios, with their strong governance, are often seen as having a higher commercial value. This is because of the recognised greater long-term business efficiencies of unitised portfolios, their resilience in asset retention and the reliable income from annual management fees.
Continuing evolution – ‘look-through’ facility
Unitised portfolios are continually evolving to further enhance the service provided for investors. For example, the Marlborough Group’s Select Platform is developing a ‘look-through’ facility that will enable unitised portfolio investors to see the individual underlying companies held in their portfolios.
