Spencer-Churchill Miller Private (SCMP) has reported strong returns for the maiden year of its two investment vehicles that invest purely in ETFs.
SCMP's Long Term Portfolio, which is managed in a similar vein to a mutual fund in the Investment Management Association's (IMA) Balanced Managed sector, gained 20.4% after fees for the 12 months to June 11.
This compares to a gain of 16.9% for the average Balanced Managed fund over the same time frame.
Meanwhile, the wealth management firm's Absolute Return product rose 16.2%, smashing the performance of most of its mutual fund peers in the same sector.
The strong returns mark a comeback for Alan Miller, senior partner and fund manager at SCMP, who left New Star Asset Management in 2007 after a period of underperformance in the hedge fund he managed.
Miller says the low cost of ETFs compared to mutual funds and much lower dealing charges helped to boost performance.
"The average fee for a Balanced Managed fund is 1.5%, while we spend on average about 0.75%" Miller says.
"In addition, the spread of an ETF based on a large, liquid index will be much tighter than the average spread of a FTSE 100 stock," he adds.
Once considered the ultimate star fund manager, Miller's move towards passive investment surprised many.
But he points out that he is still in control of asset allocation, which he says produces 90% of investment returns.
Selling all commodity and emerging market equity exposure and reducing positions in UK, European and US stock markets by the start of April helped to limit the downside of May's market rout, according to Miller.
But over the past few weeks, he has started to buy back into equities as valuations look more attractive.
Currently, the Long Term Portfolio has a 73% exposure to equities, with the rest a mixture of corporate and index-linked bonds, property and 1.5% in cash.
SCMP Absolute Return has nine percent in cash, with 51% in equities.
"Our new investment model gives investors high liquidity, transparency and a real alternative to pure active or passive fund management," Miller says.
Despite improved risk appetite
FOS award limit increase
Relates to 136 million transaction reports
Ceremony will take place 13 November