FE Research has launched a range of 15 risk-targeted portfolios to aid advisers in the run up to the Retail Distribution Review (RDR).
The FE Select Portfolios are designed to meet five levels of risk appetite across three investor time horizons - short, medium and long term.
The portfolios, which are geared towards capital growth rather than income, will consist of funds run by active managers with different strategies and styles to "maximise the diversification benefits" of active funds.
The portfolios will be open-ended in that each will contain ten fund recommendations and percentage breakdowns based on investors' risk profiles and time horizons.
However, if an adviser wants to add or remove funds from the portfolios, they are able to do so.
Rob Gleeson (pictured), head of FE Research, said the portfolios would go beyond identifying the best funds in each asset class, but would also analyse how funds interact with each other, by studying their historic volatility and correlations.
"Individual funds' volatility has proven remarkably stable over the long term and is a much better indication of future behaviour than past performance," Gleeson said.
"In addition, each portfolio has an asset allocation strategy overlaid, which allows us to incorporate the benefits of stochastic projections of what the future might hold."
Funds in the portfolio are selected on a qualitative and quantitative method.
Firstly, each portfolio will consist of funds from the FE Select 100 shortlist of funds, which represents the best available funds in each asset class.
The Select 100 list is compiled using quantitative ratings to "effectively analyse funds from all angles".
These are the FE Crown Fund ratings, which highlights funds; the Alpha Manager ratings, which pinpoint managers; and the consensus view of the adviser industry from the FE AFI panel of advisers.
FE said the portfolios and Select 100 list would be revised every six months on 1 March and 1 September. Additionally all portfolios will be subject to a "thorough, ongoing governance and monitoring process".
The rebalancing will be accompanied by a report which will be sent to advisers to highlight changes to the portfolio and the reasons behind them.
Gleeson said that, currently, advisers had to go direct to FE to access the portfolios but added that the group was currently in talks to make them available on platforms.
For adviser firms with assets of less than £50m, FE said the typical cost for using the portfolios would be about £5,000 a year. For larger firms, FE said it would be able to discuss the fee.
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