Seven Investment Management (7IM) has launched four passively-managed multi-manager funds which it says will only invest in vehicles such as ETFs.
The Asset Allocated Passives (AAP) range will incorporate the same investment discipline and structure as the firm’s existing multi-manager offerings, but with a projected total expense ratio of less than 1%.
7IM says the funds, which have no active managers, can provide advisers with a far more precise approach to risk-based asset allocation.
It says passives ensure '100% investment, 100% of the time' – as active managers can often be tempted to hold cash or similar-type positions.
“AAP is the answer to a difficult question: if the primary determinant of portfolio success is asset allocation, why do half the multi-manager costs go to the stockpickers? The answer is that they don’t need to,” 7IM chief executive Tom Sheridan says.
7IM marketing director Justin Urquhart Stewart adds: “Against a background of slowing global economic growth, investment returns are going to be challenged, and thus there will be an increasing focus on costs and how to reduce them.
"7IM AAPs will make this possible by reducing base TERs to below 1% and as they grow – potentially even lower.”
The AAP funds are the Moderately Cautious, Balanced, Moderately Adventurous and Adventurous.
There is a 4% initial charge, 1% annual management charge and 0.5% trail fee for the A class and 0.5% annual management charge for the C class. Minimum investment is £1,000.
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